# RECORD cb483fb0d918a1319e85e2a75c1ed330c7c67582
# TITLE: The effect of land subsidence on real estate values
# YEAR: 2020.0  VENUE: nan  DOI: 10.5194/piahs-382-703-2020
# AUTHORS: W. Willemsen; S. Kok; O. Kuik
# PAGES: 5  CANDIDATE TABLE PAGES (1-based): []
# ABSTRACT: Abstract. Land subsidence in the Netherlands, mainly occurring in its western and
northern peat and clay soils, causes significant damage to houses and
infrastructure, estimated at EUR 17 billion until 2050, through differential settlement of shallow foundations, negative skin friction and
fungal decay of timber piles. Various studies and reports both in The
Netherlands and abroad have addressed the potential economic impacts of
subsidence on houses: yet, these studies lack spatially detailed data and
instead rely on generic assumptions on expected damage restoration costs. By using a hedonic pricing model, this study examines the impact of subsidence on housing prices in the Dutch cities of Rotterdam and Gouda. In contrast to earlier studies, subsidence and its impact on property values are examined at house level. We test for the effect of subsidence with data related to (i) general (uniform) subsidence (mm yr −1 ), (ii) differential subsidence of a building and (iii) subsidence of the surrounding area in relation to the house. Results show that uniform subsidence has the largest impact on property values with approximately −6  %, while “differential” and “surrounding” subsidence show respectively −2  % and no effect. These results could prove useful to policymakers, homeowners and housing corporations by generating a better understanding of the impact of subsidence on property values and subsequently to create awareness and spur investments in measures to mitigate damage. It should be noted that these results are specific to the research area are therefore not immediately scalable to other cities as local conditions differ.


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Proc. IAHS, 382, 703–707, 2020
https://doi.org/10.5194/piahs-382-703-2020
© Author(s) 2020. This work is distributed under
the Creative Commons Attribution 4.0 License.
Open Access
Tenth International Symposium on Land Subsidence (TISOLS)
The effect of land subsidence on real estate values
Wouter Willemsen1, Sien Kok1, and Onno Kuik2
1Deltares, 2629 HV Delft, the Netherlands
2Vrije Universiteit Amsterdam, 1081 HV Amsterdam, the Netherlands
Correspondence: Wouter Willemsen (willemsenwouter@gmail.com)
Published: 22 April 2020
Abstract. Land subsidence in the Netherlands, mainly occurring in its western and northern peat and clay soils,
causes significant damage to houses and infrastructure, estimated at EUR 17 billion until 2050, through differ-
ential settlement of shallow foundations, negative skin friction and fungal decay of timber piles. Various studies
and reports both in The Netherlands and abroad have addressed the potential economic impacts of subsidence
on houses: yet, these studies lack spatially detailed data and instead rely on generic assumptions on expected
damage restoration costs. By using a hedonic pricing model, this study examines the impact of subsidence on
housing prices in the Dutch cities of Rotterdam and Gouda. In contrast to earlier studies, subsidence and its
impact on property values are examined at house level. We test for the effect of subsidence with data related
to (i) general (uniform) subsidence (mm yr−1), (ii) differential subsidence of a building and (iii) subsidence of
the surrounding area in relation to the house. Results show that uniform subsidence has the largest impact on
property values with approximately −6 %, while “differential” and “surrounding” subsidence show respectively
−2 % and no effect. These results could prove useful to policymakers, homeowners and housing corporations
by generating a better understanding of the impact of subsidence on property values and subsequently to create
awareness and spur investments in measures to mitigate damage. It should be noted that these results are specific
to the research area are therefore not immediately scalable to other cities as local conditions differ.
1
Introduction
Land subsidence is a substantial problem affecting many
cities worldwide. It potentially causes damage to houses,
businesses, agriculture and public infrastructure (Reddish
and Whittaker, 2012). These consequences are observed in
the Netherlands, which is prone to land subsidence due to ar-
tificial drainage of clay and peat soils, which leads to clay
settlement and peat oxidation (Nieuwenhuis and Schokking,
1997; Schothorst, 1977). Especially in urban areas subsi-
dence rates can vary over space due to a heterogeneous sub-
surface and loading by man-made structures such as build-
ings and infrastructure (Zeitoun and Wakshal, 2013). Sub-
sidence in the Netherlands is estimated to cause around
EUR 20 billion in damage up until 2050, of which at least
EUR 17 billion in expected repair costs of structural dam-
age – e.g. restoring foundations, cracked walls, sloping floors
– to buildings (Van den Born et al., 2016). This restoration
costs approach does not fully represent socio-economic im-
pact, as individual preferences such as risk aversion are not
accounted for.
1.1
Valuing subsidence risk in housing market
An approach that better reflects such individual preferences
is the revealed preference approach “hedonic pricing”, as
e.g. used by Yoo and Perring (2017) to assess the effect
of subsidence on house transactions in Phoenix, Arizona,
and to assess the impact of earthquake risks in Groningen
(Koster and Van Ommeren, 2015). This method takes all as-
pects which influence a buyer’s decision into account by us-
ing the actual transaction prices. Yoo and Perring (2017) find
that houses located in a subsiding area were valued 9.9 %
less on average. This study evaluates subsidence on a large
scale – local subsidence patterns and differences in founda-
tion are not included. In the Dutch housing market, aware-
ness of real estate damage due to subsidence has recently
increased, among other things due to the spike in damage re-
Published by Copernicus Publications on behalf of the International Association of Hydrological Sciences.