The housing market Is not immune to climate change. When we think about climate change, we often focus on floods and heavy rainfall. But underground, a slower and less visible risk is emerging: land subsidence. Sinking gardens, cracked walls, broken pipes, and damaged foundations occur gradually, but they can suddenly lead to major financial consequences for homeowners. Land subsidence is, in that sense, a crisis in slow motion (Van den Ende et al., 2023).
By: Yashvant Premchand
This article was previously published on NL AAA Klimaatbestendig, a public-private partnership committed to climate resilience in the Netherlands.
As part of my PhD research at Vrije Universiteit Amsterdam and TNO, in which I study the economic impacts of climate risks on the housing market, my colleagues and I investigated whether homebuyers in the Netherlands are already factoring in the risks and costs of land subsidence (Premchand et al., 2024). Is the market already pricing in this risk?
Conflicting interests
In certain parts of the Netherlands, such as the peat meadow areas in the Green Heart, the ground can subside by several centimeters per year. This is partly due to historical drainage for agriculture, but climate change is exacerbating the effect, particularly due to increasing drought. Low groundwater levels trigger a range of processes that lead to land subsidence, which in turn causes damage to homes and surrounding infrastructure.
The Council for the Environment and Infrastructure (2024) estimates that around 6% of all buildings in the Netherlands will experience foundation damage between now and 2035. For individual homeowners, the cost can reach tens of thousands of euros if the damage is severe. Additionally, subsidence increases the height difference between ground level and sea level, thereby increasing the risk of flooding and water-related damage.
Homebuyers responding
Our research shows that homes in areas affected by land subsidence are worth, on average, 2.3% to 5.0% less than comparable homes in the same neighborhood without subsidence. This translates to an average decrease in value of €9,941 to €21,610 per home. For older homes (built before 1970), the value decrease can reach up to 8.4%, as foundation damage is more common.
This indicates that homebuyers are sending an important economic signal: they are increasingly pricing in the potential consequences of land subsidence. However, the effect is still limited to situations where the damage is visibly apparent. Currently, there is no obligation for sellers to investigate or disclose potential damage. Buyers therefore rely mainly on their own expectations, which they form based on visible damage to nearby homes, media coverage, and public sources such as the Climate Impact Atlas. Another study, for example, shows that value reductions are even slightly higher in cities like Gouda and Rotterdam, which are notorious for subsidence issues (Willemsen et al., 2020).
The importance of transparent information
Our research also shows that this effect has increased over time. In the early 2000s, price effects were minimal, but they have risen significantly in recent years due to consecutive periods of drought. Buyers only feel a sense of urgency when they are fully informed of the consequences.
Similar findings emerge from the study by Hommes et al. (2023), which looked at the effect of mentioning foundation damage in property listings. Their research shows that full disclosure leads to a value decrease of 12% – almost equivalent to the average cost of foundation repair.
We see comparable effects with flooding as well. A small portion of the risk is already priced in (Bosker et al., 2019), but a significant drop in value tends to occur only after an actual flood event (Daniel et al., 2009). Interestingly, this effect fades over time – homebuyers seem to forget the consequences of a flood. That’s why transparent and accessible information about climate risks is essential—not just about land subsidence, but about climate risks in general. Without transparency, the market cannot properly account for these risks, leading to financial and societal consequences.
Who bears the cost?
Currently, the responsibility for damage and associated costs lies with the homeowner. There are ongoing discussions about subsidies or support measures. At the same time, this raises questions about solidarity and fairness: should public funds be used to cover private damage that was not adequately accounted for in property transactions? And what does this mean for people who deliberately choose to live in safer areas?
Our paper, along with previous studies, shows that homebuyers do consider potential damage and costs – if they are sufficiently informed. The Scientific Climate Council (2025) also recommends in a recent report to: “Make information about the climate risks of homes accessible to everyone. This allows people to make better decisions, and banks and insurers to responsibly assess these risks. Protect vulnerable groups from unintended consequences.”
What is considered fair and equitable is ultimately a political decision. But one thing is certain: if we postpone this discussion, we are simply passing the costs on to future generations.
References
Bosker, M., Garretsen, H., Marlet, G., & van Woerkens, C. (2019). ‘Nether Lands: Evidenceon the price and perception of rare natural disasters’. Journal of the European Economic Association 17.2, pp. 413–453.
Daniel, V. E., Florax, R. J., & Rietveld, P. (2009). Floods and residential property values: a hedonic price analysis for the Netherlands. Built environment, 35(4), 563-576.
Hommes, S., Phlippen, S., Van Reeken-van-Wee, J., Schreuder, C., & Ypma, F. (2023). Gemelde funderingsschade leidt tot forse prijskorting bij woningverkoop. ESB 108(4819), pp. 136–139.
Premchand, Y. R., de Groot, H. L. F., de Graaff, T., & Koomen, E. (2024). Land subsidence exposed the impact on house prices in the Netherlands (No. TI 2024-073/VIII). Tinbergen Institute Discussion Paper.
Raad voor de Leefomgeving en Infrastructuur (2024). Goed gefundeerd. Advies om te komen tot een nationale aanpak van funderingsproblematiek.
Van den Ende, M. A., Hegger, D. L., Mees, H. L., & Driessen, P. P. (2023). Wicked problems and creeping crises: A framework for analyzing governance challenges to addressing environmental land-use problems. Environmental Science & Policy, 141, 168-177.
Wetenschappelijke Klimaatraad (2025). Advies: Durf onze ruimte fundamenteel anders in te richten.
Willemsen, W., Kok, S., & Kuik, O. (2020). The effect of land subsidence on real estate values. Proceedings of the International Association of Hydrological Sciences, 382, 703-707.