Limate change has increased the frequency but also the intensity of the extreme weather events we are witnessing around the world. According to data from the UK Met Office, since 1884 the average annual air temperature has increased by 13.4% in the UK. Over the coming century, the number of heat wave days and the intensity and frequency of extreme rainfall events are expected to continue to increase, resulting in many natural disasters such as floods.
Over the past ten years, the UK has experienced at least three severe flood events: the 2013-2014 winter floods in southern England, the 2015-2016 winter floods in northern Great Britain Britain and the 2019-2020 floods, in the north of England, the Midlands and across the England-Wales border.
Destruction of capital and insurance
According to the Environment Agency, the damage caused by this latest event was estimated at 333 million pounds [387,5 millions d’euros environ] while the financial cost of the 2015–16 events was £1.6 billion.
France is also regularly affected by episodes of flooding, such as those in the south and south-east of France in September 2021 and 2022, and it experiences flooding of rivers. According to the European Center for the Prevention of Flood Risks (Cepri), 20% of French households are affected by floods.
These affect real estate prices in several ways. Among them are the destruction of capital and the increase in insurance costs, limiting the possibilities of financing.
The consequences of floods are also indirect since they lead to changes in consumption habits and a decrease in economic activity. Currently, one in six properties in England are at risk of flooding and the likelihood of properties near rivers and floodplains experiencing severe flooding has increased rapidly in recent years.
However, how flood risk affects the real estate market is controversial. Most buyers don’t think about flooding when buying real estate and they generally underestimate the damage that could result.
Discounts from 8.14% to 32.2%
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