Urban housing markets increasingly face escalating flood risk alongside persistent scarcity and affordability constraints. While these pressures shape price dynamics, their effects depend critically on heterogeneity in household risk perceptions and preferences. This study develops a spatial agent-based model (ABM) to examine how price differentials and residential patterns emerge from bottom-up interactions in a flood-prone urban environment. Parameterised to represent a typical city in the Netherlands, the model conducts scenario experiments that vary (i) market demand pressure, (ii) spatially heterogeneous individual risk perception biases, and (iii) public flood defense systems, including traditional defenses and nature-based flood defenses with co-benefits. Results show that market pressure and biased risk perceptions are the primary drivers of price growth and income-based exclusion, emerging well before flood defenses are introduced. Traditional flood defenses narrow flood-related price discounts by reducing objective risk, with nature-based defenses further reinforcing existing patterns through amenity capitalization. In both cases, public flood protection mainly reallocate demand spatially without altering overall market participation or affordability. ... Read more

Nature-based solutions (NbS) are a cornerstone of climate change adaptation worldwide. Yet, evidence on their economic benefits is scarce, especially since the provided environmental amenities usually spatially correlate with climate-induced hazards, effects of which NbS aim to curb. This lack of empirical evidence creates obscurity regarding social acceptability of NS, hindering their uptake and upscaling. We apply hedonic price models to estimate homeowners' willingness-to-pay for NbS (like flood safety, environmental benefits), while controlling for spatio-temporal changes in capitalized flood risk discounts due to the 1993-1995 floods in the Limburg Province, the Netherlands. We reveal a pre-flood effect of 5.6% (discounting on average -€12,753 for flood-prone properties), which rises to 10.9% (−€24,691 on average) immediately after the floods. However, the effect is only transitory. The flood discount of home values price discount diminishes over time and eventually vanishes in 9–12 years, which coincides with the implementation of the largest and oldest NbS intervention in the Netherlands. Our analysis shows that NbS amenities provide a 15% (€33,687 on average) premium to nearby residential property prices. This evidence of the evolving flood risk discount and the stable NbS premium for individual homeowners could support the economic feasibility and wide acceptability of NbS for climate change adaptations. ... Read more