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Valuing bushfire risk to homeowners: Hedonic property values study in Queensland, Australia

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  • Athukorala, Wasantha
  • Martin, Wade
  • Wilson, Clevo
  • Rajapaksa, Darshana

Abstract

Bushfires are a common occurrence and are an inevitable natural event in many regions of Australia in most years. Despite the dangers of such bushfires to nearby properties and human life, humans continue to live in close proximity to bushfire prone areas. The pertinent questions asked in this study are whether residents are aware of the dangers of living in such areas- and if so, is it reflected in lower property values? Such residents have the choice of either discounting the risks of bushfires in their neighbourhoods or deciding to pay more to live in bushfire areas for the positive amenity values afforded by forested bushland settings. Buyers paying a premium price to live in close proximity to green space are well documented in hedonic property (HP) values studies. We examine this phenomenon using data available for forested bushfire prone areas in the immediate environs of the city of Brisbane, Queensland, Australia using an HP values approach. For this study sales data of 1028 houses in four suburbs are used. The regression results clearly show that residents in fact are paying more to be close to green space (forested areas) which is also clearly identified as bushfire prone areas. The threat of bushfires may have an effect on property prices but it is dominated by the desire to live close to green spaces.

Suggested Citation

  • Athukorala, Wasantha & Martin, Wade & Wilson, Clevo & Rajapaksa, Darshana, 2019. "Valuing bushfire risk to homeowners: Hedonic property values study in Queensland, Australia," Economic Analysis and Policy, Elsevier, vol. 63(C), pages 44-56.
    • Handle: RePEc:eee:ecanpo:v:63:y:2019:i:c:p:44-56
    DOI: 10.1016/j.eap.2019.04.013
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