The impact of flood insurance on residential property prices: Towards a new theoretical framework for the UK market
Lamond, J. , Proverbs, D. and Antwi, A. (2007) The impact of flood insurance on residential property prices: Towards a new theoretical framework for the UK market. Journal of Financial Management of Property and Construction, 12 (3). pp. 129-137. ISSN 1366-4387
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Publisher's URL: http://dx.doi.org/10.1108/13664380780001099
• The supposition that the availability and cost of insurance will have an effect on house prices is often accepted as fact. However the mechanism for this supposed impact has not been clearly articulated and the hypothesis is far from proven in the UK market. • Measurement of the effect of insurance is complicated by the fact that the parties are acting in the presence of incomplete information and that insurance costs can act as a proxy for other value drivers such as flood risk. Models useful in other countries cannot be applied sensibly to the UK market because of the unique properties of the UK insurance regime. • Novel hypotheses are suggested for the three principal ways in which the availability and cost of insurance might infl uence the prospective property transfer. A method for testing one of these hypotheses is proposed using a quasi-experimental approach with the aim of determining whether a relationship between insurance cost and house price does indeed exist.
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