Floods and flats: Housing market responses to flood risk in Japan

A significant portion of the global population resides in coastal areas and faces increasing flood risks. This study applies a hedonic pricing model to examine how flood risk affects residential property prices in Japan, using both plan-scale and maximum-scale flood maps. Our analysis indicates that apartments located within plan-scale flood zones are priced 8.5% lower than comparable units outside these zones, while under the maximum-scale flood scenario, prices decline by about 5.8%. Regional heterogeneity is pronounced, with flood risk effect being markedly stronger in metropolitan areas: properties within plan-scale flood zones experience a price reduction of around 25%, and those within maximum-scale zones see a nearly 20% decrease. Height-based analysis further reveals that the housing market incorporates interactions between expected flood depths and floor levels when valuing properties. In addition, the results suggest that Japan’s 2020 mandatory flood disclosure policy has likely strengthened the extent to which potential flood damage is reflected in property prices. These findings highlight the importance of integrating flood risk into climate adaptation planning, particularly in densely populated metropolitan regions.