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Buying real estate and natural hazards: an eye on risks
Find out how climate change reduces the value of real estate and what risks from natural hazards homeowners should be aware of. Protect your home with the right insurance coverage.
Buying real estate and natural hazards: an eye on risks
Climate change is already having a noticeable impact on the real estate market. According to the 2023 Natural Hazards Report from the General Association of Insurers, natural hazards and weather extremes are increasing. Germany must prepare for increased droughts, heat waves, storms, hail, heavy rain and floods. These natural disasters can cause significant damage to buildings. In the first half of 2023, insured losses in Germany amounted to 1.9 billion euros, a large part of which was damage to houses.
The risks posed by natural disasters have a significant impact on the real estate market. A study by the Leibniz Institute for Economic Research shows that real estate offers within 150 kilometers of a flood can fall by up to seven percent, even though the affected houses were not directly damaged. The time distance to a flood also plays a role, as the price reductions disappear again after about ten years, although this does not change the statistical risk. Municipal flood risk maps can help potential property buyers assess risk.
Storms and hail are other serious threats to property owners. Although there is no increase in these weather phenomena due to climate change in Germany, the increasing size of hailstones is causing concern for insurance companies. Storms and hail caused damage amounting to 2.7 billion euros in 2022. The susceptibility to damage of certain building elements such as photovoltaic systems and facades is significantly increased. According to the Verti Insurance Hail Atlas, Bavaria, Hesse and Baden-Württemberg are the leaders in hail damage.
Insurance can help property owners protect themselves against the financial consequences of natural disasters. Nevertheless, the costs for appropriate insurance can be very high depending on the location and individual circumstances. Even with insurance coverage, homeowners must prepare for the stress and hassle that comes with damage caused by natural disasters.