The impact of floods on the real estate market

Following a flood, one can expect significant variations in property prices depending on the location. There is also a risk of rental rates increasing in areas affected by the disaster. Real estate agents predict that in the long run, as seen in 1997, the situation will stabilize. This year’s flood devastated many areas in southwestern Poland, which will certainly impact the local real estate markets. Below are the results of a survey conducted by the Nieruchomosci-online.pl portal on this topic.

Piotr Stokłosa, Freedom Nieruchomości in Nysa

Piotr Stokłosa from Freedom Nieruchomości agency in Nysa points out that in the areas where his firm operates, the scale of destruction is immense. In this situation, it’s no surprise that agents are currently not arranging property viewings. Interest in buying homes and apartments is very low. Instead, clients are more frequently inquiring about rental properties. They are temporarily unable to live in their homes and are looking for properties to rent for a few months, covering the period needed for repairs and restoration.

The agency was also handling the sale of several properties that were flooded or water-damaged. Both agents and intermediaries are aware that selling these properties will be impossible for the next two or even three years.

When asked about the flood’s impact on the local real estate market, Stokłosa responds:

How will the flood affect the housing market in our region? In the long term, everything will certainly return to normal – crises such as the coronavirus pandemic, galloping inflation, or the ongoing war in Ukraine have shown this. I also believe people will pay more attention to whether a property is located in a flood-prone area or not.

The Nysa and Prudnik counties were severely impacted by both the 1997 flood and this year’s flood. This time, however, the scale of destruction was greater. Real estate agents recall that after 1997, many clients paid attention to whether a property was located in a floodplain. Over time, this ceased to be a priority, as people believed that such a disaster would not happen again in their lifetime. Unfortunately, they were wrong. That is why some people affected by the flood now have no intention of rebuilding or renovating their properties.

They want to sell them at a lower price and use the funds to buy a property in a safer location. According to agents, this trend may result in an influx of properties in need of renovation entering the market at attractive prices. However, selling them could be difficult, as they may not be seen as good investments.

Ewa Klos-Rychter, KLOS Real Estate Legal Office

Ewa Klos-Rychter, a legal advisor and real estate agent at KLOS Real Estate Legal Office, notes that the flood has divided local real estate into three sectors. The first includes properties and plots that were completely flooded. Here, prices will clearly drop. The reasons for downward price adjustments include, on one hand, the risk of another flood, and on the other hand, the permanent damage caused by the water to the buildings. Even if flood-affected properties undergo extensive renovations, their foundations will remain weakened, and buyers may be wary of such investments.

Regarding the second sector, the legal advisor says:

The second sector includes properties from flood-prone areas that ultimately did not suffer any damage. These locations will also be more challenging to sell. Examples include the rapidly developing Wrocław neighborhoods of Marszowice and Stabłowice. Buyers of homes in such places never considered the flood risk until September 2024.

Selling properties from this segment will certainly be more difficult, especially if they are located on the lower floors of buildings. Of course, their prices will also be adjusted downward, although the drop in value will certainly be smaller than for homes and apartments that were actually flooded.

The third sector consists of properties located in safe, flood-free areas. An example is Wrocław’s Krzyki district. Most of this neighborhood is far from the river. In this case, prices may increase. Sellers are already adding information in their advertisements that the property is located outside a flood zone. For them, this is a justification for raising the price.

This division is clear and may lead to greater price differentiation for properties in southern Poland. Over time, people will forget about it, and they will ask less frequently about the location of a home or apartment in relation to the flood risk. Being near a river could again become an asset.

Ewa Klos-Rychter emphasizes:

My advice for investors: remembering the scenario from 27 years ago, it’s worth looking at cheaper properties, of course after checking their technical condition. Their prices should eventually align with the rest of the market.

Could flood victims significantly affect the rental market?

Real estate agents believe that this phenomenon will be marginal. Flood victims have often lost all their belongings. They usually stay with friends, family, or rely on government support. Looking at the behavior of landlords at the beginning of the war in Ukraine, the risk of a sudden rise in rental prices due to flood victims is minimal.

Zofia Michta, Renomahome in Wrocław

Zofia Michta from the Renomahome agency in Wrocław notes that people affected by the flood from flood-prone areas are increasingly looking for new, safer homes. Such high demand may contribute to rising prices in areas unaffected by the flood. Living in local markets may also present a great opportunity for house flippers. Real estate agents are receiving more and more inquiries about properties in Kłodzko or Stronie Śląskie. Those that were not destroyed by the flood and are not at risk of flooding could be good investments for the future.

When asked about demand in the local market where she operates, Zofia Michta responds:

We also notice increased interest in houses or plots located near flooded areas that were not affected by the flood. The reason is simple: now is the best time to assess whether there was water there or not. Soon, repairs will begin, some properties will go up for sale, and at this moment, nothing can be hidden.