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

Adrian Fernandez-Perez (), Marta Gómez-Puig () and Simon Sosvilla-Rivero
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Adrian Fernandez-Perez: 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.

No 202516, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

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. A central methodological contribution of this paper is the use of spatial econometric techniques to detect and quantify these spillover effects. By explicitly modelling spatial dependence, we can disentangle local impacts from broader geographic transmission mechanisms, revealing how climate stressors reshape housing demand across regions. These findings highlight the importance of incorporating climate-related factors into real estate market analysis and the design of adaptation policies.

Keywords: Extreme Heat Temperature; Housing Prices; Spatial Econometrics; Environmental Economics. JEL classification: C23; Q54; R14; R21; R31. (search for similar items in EconPapers)
Pages: 48 pages
Date: 2025-11
New Economics Papers: this item is included in nep-env, nep-eur, nep-geo, nep-hre and nep-uep
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Working Paper: Hot Property: A Spatial Analysis of Temperature and Housing Prices in Spain (2025)
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