The Impact of Flood Events on Residential Property Values in Malaysia: A Microeconomic and Macroeconomic Perspective
DOI:
https://doi.org/10.63912/kjaise.v1i0.0008Keywords:
Flood events, residential property values, hedonic pricing model, flood risk, GDP, inflation, unemployment, housing market, Malaysia.Abstract
Flooding has become one of the most significant environmental hazards affecting residential property markets in Malaysia, particularly in flood-prone regions such as Kelantan, Kota Damansara, Selangor, and the Klang Valley. This paper examines the impact of flood events on residential property values by integrating both microeconomic and macroeconomic perspectives. The study focuses on different residential housing categories, including terrace houses, general residential properties, and semi-detached (Semi-D) houses. Using the Hedonic Price Model (HPM) and multiple linear regression analysis, the paper evaluates how flood-related factors, together with economic and demographic variables, influence housing prices.
The findings indicate that flood events negatively affect residential property values due to physical damage, higher repair costs, reduced buyer confidence, and increased financial uncertainty. Variables such as flood duration, flood depth, and flood occurrence significantly reduce property prices, while economic indicators including income, employment, Gross Domestic Product (GDP), and population growth positively influence residential housing demand and values. The study also finds that interest rates, inflation, and unemployment contribute to fluctuations in property prices.
This paper contributes to the growing literature on environmental risk and housing economics by providing a comprehensive understanding of how flooding affects residential property markets in Malaysia. The findings offer practical implications for policymakers, urban planners, property developers, financial institutions, and homeowners in designing sustainable housing policies and flood mitigation strategies.
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