EFFECTS OF FLOODING ON RESIDENTIAL PROPERTY PRICES IN SINGAPORE

Abstract

This paper aims to investigate the relationship between flood events and property prices. Climate change has caused more intense weather patterns; Singapore is no exception. The low-lying island is particularly vulnerable to flood events, especially during the monsoon season. The public drainage systems are under immense pressure from the heavy and prolonged rain, leading to floods, which cause inconvenience to people and lead to property and structural damages. Properties are highly valuable assets to many, and safeguarding their values against floor risks is important. Given that Singapore is land scarce with no abundant high grounds to retreat to, property values in flood-prone areas may be severely threatened by the increased frequency of floods. This study used a difference-in-difference (DID) regression to test the effects of flood events in the year 2021 on housing prices. It concludes that residential properties located within a 500 m distance from flood-prone areas experienced a 3.3% price discount after a flood event. This paper can provide insights for current homeowners of flood-prone properties to realize how flooding affects their property values, along with future homeowners and investors to make better housing and investment decisions. Lastly, the results can also prompt the Singapore government towards whether they should further step up on their flood risk management measures to adequately prepare against future flooding events.