A Quasi-Experiment in Monetary Policy: Fault Lines of Value: The Impact of Earthquake Risk on Istanbul Housing Market

Oguzhan Cepni, Ismail Genc, Lokman Gunduz and Muhammed Hasan Yilmaz

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Using a unique dataset of house prices and a difference-in-differences methodology, we find that households in Istanbul reassessed the risks associated with earthquakes following the Kahramanmaraþ Earthquake Sequence on February 6, 2023. The increase in both housing prices and rental rates was relatively subdued in Istanbul neighborhoods with high earthquake risk compared to those in low-risk areas. Furthermore, houses built before the Turkish Earthquake Code of 2007 are heavily discounted in high-risk areas relative to those constructed afterward. Finally, the earthquake risk premium observed in house prices in low-risk areas was smaller in percentage terms for more expensive neighborhoods. These findings have important policy implications for the implementation of earthquake-resistant measures in Turkiye.

Keywords: Difference-in-differences; Kahramanmaraþ earthquake; Earthquake risk premium; House prices (search for similar items in EconPapers)
JEL-codes: D80 Q54 R21 R30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2517

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