Abstract: Flooding is among the most frequent and damaging natural hazards in Italy, yet its indirect effects on the housing market remain poorly understood. This study investigates how the perception of flood risk influences property values today and how these effects may evolve under future climate change. In the first phase, we analyze data from 550,000 mortgages across Italy to estimate the current impact of flood risk on housing prices. Our econometric analysis reveals that flood exposure depresses property values only in regions repeatedly affected by floods, while individual events have no measurable effect — suggesting that historical memory, rather than immediate experience, shapes risk perception. In the second phase, we embed this behavioral mechanism into an agent-based model (ABM) combined with climate projections to simulate future market dynamics. Results indicate that by 2050, flood-exposed properties will lose additional value, while safer areas will gain, reshaping spatial housing demand.

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