Why would anyone buy a house on a flood plain?
The recent downpour has caused severe flooding in many parts of the West and South West of England, and many people asking may very well ask the question: ‘why would you buy a house in an area you know is prone to flooding?’ Surely the knowledge of flood history (easily obtained) would put off any buyer in their right mind, especially considering that property prices are not much reduced as well as the fact that many property insurance policies do not cover regular flooding events.
A wet November
Tewkesbury was flooded this week, the water rising up very near to the Abbey, claiming many old buildings and anything else in its wake. These events have prompted officials to question why exactly houses are still being built on flood plains and also, why would anyone buy a house or continue to live anywhere with a history of such devastating floods.
Property values don’t fall?
The obvious answer is that floods have caused large property value falls, so people take the risk and move to risk areas. There was no evidence to suggest however that any massive drop in property prices occurred in the long term. Tewkesbury house prices were not affected for instance by the 2007 floods or any prior to that. Yes, the house prices did drop from 2007 onwards, but so did the rest of the nation’s – Tewkesbury’s decrease in property value was in line with the rest of the country. The same applied to Cumbria as well as Cockermouth, both places severely affected by flooding.
This information is of course not a complete indicator in itself – you need to take into account historical locations, different types of property as well as a myriad of other factors. The trend does show however that whilst immediately after flooding, property prices drop by 10%, that the price is generally unaffected in the long term, after a good 6 months or so.
Optimism
One explanation for this is that buyers look for or think they can see ways in which to flood proof a property. Another factor is that floods are seen by many residents as a once-in-a-lifetime event, so are willing to take the risk. In some of the most flood prone areas however, you may be unlucky and get floods on consecutive years. Certainly the likelihood is that you’ll get a flood every other year.
Another thing to consider is that many people do not move far at all when buying a house, so where someone in a flood prone area would not see buying a flood-prone house as a problem, people from other areas, would. People from a historic town such as Tewkesbury would typically be unlikely to move as it’s an idyllic setting with historical buildings, tea rooms and of course, the Abbey. These sentiments can help to explain something which to outsiders, seems like a foolish gamble.