Using Istanbul as a case-study, research develops a method that estimates the impact environmental disasters have on house prices.
There is considerable interest from house buyers, estate agents, valuers, mortgage lenders, and policy makers in developing methods that accurately estimate the impact on house prices of the perceived risks of damage from environmental disasters, including earthquakes and floods.
Using Istanbul as a case-study, this research aims to apply multi-level modelling techniques to explore the impact of earthquake risk before and after an event within the study area. This technique has recently been shown to improve the accuracy of estimates of the spatial differences in house prices
The main contribution of the research is to establish an exemplar of how multi-level models might be used as an alternative to the econometric and survey techniques that currently dominate event studies of this type. It also provides new estimates of earthquake risk in the study area, Istanbul, which will be of immediate use to market actors and policy makers.
The specific results of this research show that, since the earthquake activity in the wider region in 2011, proximity to areas with a history of activity has had significant impacts on prices. This information will be of considerable use to house purchasers, insurance agents and mortgage lenders.
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