Hot Property: A Spatial Analysis of Temperature and Housing Prices in Spain

Adrian Fernández-Pérez (), Marta Gómez-Puig () and Simon Sosvilla-Rivero
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Adrian Fernández-Pérez: Department of Banking and Finance, Michael Smurfit Graduate Business School, University College of Dublin (Ireland)
Marta Gómez-Puig: Department of Economics and Riskcenter, Universitat de Barcelona (Spain)
Authors registered in the RePEc Author Service: Marta Gómez-Puig ()

No 2025-04, Documentos de Trabajo del ICAE from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico

Abstract: This study examines the impact of extreme temperatures on housing price dynamics in Spain, considering both direct and indirect effects across geographic space. Using panel data at the provincial level and a spatial econometric model, we find that an increase in the number of days with maximum temperatures exceeding 35 °C (95ºF) over the past year is significantly associated with a decline in both sale and rental prices within the affected province. However, we also identify a positive indirect effect on housing markets in more distant provinces, particularly in the rental sector, consistent with a pattern of temperature-induced house price premium in cooler regions.

Keywords: Extreme Heat Temperature; Housing Prices; Spatial Econometrics; Environmental Economics. (search for similar items in EconPapers)
JEL-codes: C23 Q54 R14 R21 R31 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2025
New Economics Papers: this item is included in nep-des and nep-ure
Note: This paper is based on work supported by the Spanish Ministry of Science and Innovation [grants PID2024-157911NB-I00 and TED2021-129891B-I00], the Spanish State Investigation Agency [grant PID2023-146832OB-I00] and Generalitat de Catalunya [grant 2023CLIMA00012].
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