Urban housing markets under flood risk
Modeling demand pressure, risk perception bias, and public interventions
Asli Mutlu (TU Delft - Technology, Policy and Management, TU Delft - Technology, Policy and Management)
Tatiana Filatova (TU Delft - Technology, Policy and Management, TU Delft - Technology, Policy and Management)
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Abstract
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.
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