The Impact of earthquake risk upon housing prices in the riverbeds: Istanbul Sample

Abstract

This essay attempts to answer the question to what extent the impact of earthquake risk upon housing prices differs between high-risk and low-risk areas in riverbeds in Istanbul, where the devastation of the 1999 Kocaeli earthquake was quite significant and a new earthquake with a magnitude greater than 7 is considered to be highly probable to take place before 2034. This research, conducted 16 years after the earthquake, rests upon the statistical analysis of the prices of the residential units located in the visible risky riverbeds commonly found all over Istanbul and of those with the same attributes in the neighboring areas. The geological maps designate nearly 250-meter-long areas lying both to the left-hand and right-hand sides of the thalwegs of the four riverbeds in the center of Istanbul as high-risk zones, and those areas between nearly 250 and 500 meters to the left and right of the thalwegs as low-risk zones. The central question of the article is whether earthquake risk has any impact on housing prices in the riverbed areas in Istanbul, and if it does, what the price differentials are. The prices of residential units on a number of buildings whose locations are checked on the geological map are examined using compare means analysis and regression analysis. Both types of statistical analysis yield the same results: the earthquake risk has a negative impact on two areas, while one area shows no price changes due to this risk, and the dwellings on one high-risk zone have higher prices. It has been found out that the change in housing prices occurs depending on the housing submarkets in the riverbeds. Moreover, in those areas where the price differentials are found to exist, the impact rate varies. The essay compares the findings of the two types of statistical analysis as well as demonstrating which variables are effective on the homogeneous submarkets formed through cluster analysis. The results of this study can be employed in similar research aiming to calculate the impact of earthquake risk or the change in the risk perception on housing prices