Due to Storm Hans and the recent torrential rain, flooding has once again been in the spotlight, both in media coverage and reported insurance cases. During the spring, Metria, together with Valueguard, has conducted an analysis of the cloudburst in Gävle 2021 with the aim of analyzing the price development of the flood-affected properties.
Analysis of flood-affected properties Gävle shows a decline in sales price
During the night of August 18, 2021, Gävle and its surroundings were hit by a so-called "Millennium Rain". A downpour during one day with 161 millimeters of rain compared to normal 70-80 millimeters throughout August. The cloudburst resulted in enormous flooding and many properties that were damaged by water, with damage estimated by the Swedish Insurance Federation at almost half a billion kronor. Around 7,000 claims were made in the Gävle area and in Dalarna, with single-family homes accounting for around 83% of the reported insurance claims. One year after the flood, the total net cost of estimated insurance claims for Gävle municipality amounted to just over SEK 335 million.
Data and methodology
In the analysis, Metria and Valueguard have used the Housing Register together with data on possible water depth (bluespot analysis) and the amount of precipitation during the cloudburst and have based on this produced a basis of exposed properties. Based on this, properties at risk have been graded and analyzed based on how prices and sales volumes developed before and after the flood. Sales statistics before the floods and in other areas after the floods are also included in the analysis.
Cost analysis of the flood conducted by Metria and Valueguard
The analysis shows a price decline of about 5% for the worst affected properties. The analysis would require a larger number of real estate transactions to be established with statistical significance, however, what we see is a clear indication that the worst flood-affected properties have a decline in sales price of about 5%.
This type of event is often associated with a risk or vulnerability for the insurance industry. However, what we see in this analysis also shows a significant impact on the private finances of individual property owners. The banks get a potential decrease in value of the pledged collateral and a customer in a weakened financial position," says Martin Hising, Head of Product and Business Development at Metria.
"We think this is an interesting conclusion to analyze further, especially given that we see an increased risk of extreme rainfall and intensity of torrential rain in the future due to the changing climate.
Unfortunately, this will become an increasingly common event," says Martin.
Metria Climate Index Property - Climate index for properties and homes in Sweden
Metria's Climate Index Property gives users a unique opportunity to get an index of identified climate risks on all properties in Sweden. The underlying data is also made available in cases where you want to dig deeper on a specific property or in-depth analysis on a property portfolio.
More information can be found here:Metria climate analysis for properties and homes in Sweden
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Metria climate analysis for properties and homes in Sweden
With geographical information, we can calculate where the risks are greatest and how these areas will be affected by events such as storms or floods.