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Do Property Buyers Ignore Climate Risks? A hedonic analysis of flood risks in Malmö

Sandin, Thea LU (2025) NEKP01 20251
Department of Economics
Abstract (Swedish)
As climate change intensifies, coastal cities face increasing flooding risks that threaten housing markets and urban infrastructure. This thesis examines whether these risks are reflected in property prices in Malmö, Sweden – a city identified as highly vulnerable to future coastal flooding. Using a hedonic pricing model combining GIS data and detailed property sales data from 2024, we investigate how consumers respond to three distinct flooding scenarios: 100-year, 200-year, and extreme floods. Contrary to theoretical expectations, the results show that properties in flood-prone zones receive a price premium, particularly in the more frequent scenarios. This paper argues that this is due to an inability to account for climate risks, due... (More)
As climate change intensifies, coastal cities face increasing flooding risks that threaten housing markets and urban infrastructure. This thesis examines whether these risks are reflected in property prices in Malmö, Sweden – a city identified as highly vulnerable to future coastal flooding. Using a hedonic pricing model combining GIS data and detailed property sales data from 2024, we investigate how consumers respond to three distinct flooding scenarios: 100-year, 200-year, and extreme floods. Contrary to theoretical expectations, the results show that properties in flood-prone zones receive a price premium, particularly in the more frequent scenarios. This paper argues that this is due to an inability to account for climate risks, due to a combination of radical uncertainty surrounding climate change and behavioural biases. The findings contribute to a growing body of literature that investigates the ability of market prices to reflect climate-related risks and it underscores the urgency of policy responses that improve risk awareness and incorporate climate adaptation into urban planning and housing policy. (Less)
Please use this url to cite or link to this publication:
author
Sandin, Thea LU
supervisor
organization
course
NEKP01 20251
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Flooding risks, climate change, housing market, hedonic price model, uncertainty
language
English
id
9209311
date added to LUP
2025-09-12 11:17:58
date last changed
2025-09-12 11:17:58
@misc{9209311,
  abstract     = {{As climate change intensifies, coastal cities face increasing flooding risks that threaten housing markets and urban infrastructure. This thesis examines whether these risks are reflected in property prices in Malmö, Sweden – a city identified as highly vulnerable to future coastal flooding. Using a hedonic pricing model combining GIS data and detailed property sales data from 2024, we investigate how consumers respond to three distinct flooding scenarios: 100-year, 200-year, and extreme floods. Contrary to theoretical expectations, the results show that properties in flood-prone zones receive a price premium, particularly in the more frequent scenarios. This paper argues that this is due to an inability to account for climate risks, due to a combination of radical uncertainty surrounding climate change and behavioural biases. The findings contribute to a growing body of literature that investigates the ability of market prices to reflect climate-related risks and it underscores the urgency of policy responses that improve risk awareness and incorporate climate adaptation into urban planning and housing policy.}},
  author       = {{Sandin, Thea}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Do Property Buyers Ignore Climate Risks? A hedonic analysis of flood risks in Malmö}},
  year         = {{2025}},
}