This study examines the impact of flood-hazard zone location on residential property
prices. The study utilises data from over 2000 private residential property sales
occurred during 2006 in North Shore City, New Zealand. A spatial autoregressive
hedonic model is developed to provide efficient estimates of the marginal effect of
flood prone risks on property prices. Results suggest that the sale price of a residential
property within a flood prone area is lower than an equivalent property outside the
flood prone area. The flood plain location discount is reduced by the release of public
information regarding flood risk.
