Impact of Natural Disasters on House Prices: A Global Analysis and Policy Implications

Impact of Natural Disasters on House Prices: A Global Analysis and Policy Implications

Arpita Jha

This study addresses the limited research on how natural disasters affect house prices by analyzing data from 117 countries between 2000 and 2018, using a panel regression approach to assess these impacts. The results reveal that natural disasters tend to decrease house prices, a finding that holds strong across multiple robustness checks. Specifically, geological disasters are found to have the most significant negative impact on property values. The study also distinguishes between the effects of small and large disasters, with both showing a clear downward effect on house prices. These insights carry important implications for policymakers and investors, as lower house prices in disaster-prone areas may indicate reduced consumption and investment due to the wealth effect, potentially leading to wider economic downturns. To support these regions, economic policymakers might consider measures such as low-tax policies or quantitative easing. The findings also highlight the urgent need for governments to address climate change impacts on the housing market by adopting sustainable technologies and renewable energy sources.

Keywords
Natural Disasters, House Pricing, Climate Change, Statistical model