How flood exposure is reshaping Dutch house prices

Dutch homes in flood-exposed areas are already trading at a measurable discount, but well-designed flood protection can largely shield the housing market from this effect. That is the key message of a new article in Real Estate Economics, called Dutch dilemma: Housing prices and flood risk exposure. The study examines how buyers in the Netherlands price flood risk into their decisions. Using a dataset of 1.8 million property transactions between 1998 and 2023, the authors quantify how much flood exposure matters in one of the world’s most densely populated river deltas.

Across the country, homes exposed to flood risk sell for about 1.1% less than comparable homes outside flood zones. While this average discount may seem modest, the study finds substantial variation depending on the intensity of flood risk, the institutional arrangements that apply in different zones, and how informed and sophisticated buyers are. In areas with higher exposure or less protective arrangements, the price penalty is larger, indicating that many households do take flood risk into account when choosing where to live and how much to pay.

A persistent discount on flood-exposed homes affects collateral values, portfolio risk profiles and long-term affordability in vulnerable regions. At the same time, the study shows that collective adaptation measures, such as dike upgrades and large-scale flood protection projects, significantly reduce or even neutralise these negative price effects. Where strong defences are in place, the housing market appears more resilient, suggesting that households and investors trust these measures to manage physical climate risks.

Crucially, the authors conclude that the costs of major adaptation projects are relatively small compared with the economic value they generate by protecting the housing market from flood risk. This strengthens the economic case for continued investment in Dutch flood defences, not only as a safety measure but also as a way to preserve household wealth and financial stability.