Search

The Impact of Climate Change on Estate Prices

Author(s)

Tiankai Song

Affiliation(s)

School of Business, East China University of Science and Technology, Shanghai, China

Abstract

As global climate change intensifies, extreme weather events, sea level rise and persistent droughts have become major challenges to the economic development of countries. Climate change not only affects ecosystems, but also has far-reaching impacts on urban economies, real estate markets and asset values. Real estate, as a typical long-term asset, is highly sensitive to environmental changes, so it is of great academic value and practical significance to study how climate change affects the real estate market, especially the volatility of house prices in different regions. This thesis provides an overview of the mechanisms by which climate change affects real estate market prices, explores how different types of climate risks act on real estate markets globally, and analyses the impacts of regional differences, policy interventions and market psychology on house price changes. In addition, the paper points out the gaps and deficiencies in the current research and proposes directions for future research.

Keywords

Climate Change; Property Market; House Price Volatility; Climate Risk; Regional Differences; Transition Risk; Satellite Data; Market Psychology

References

[1] Bell, M. L., & Levy, J. I. (2018). The impact of climate change on urban housing markets: implications for real estate investors. Urban Climate, 26, 100-112. [2] Kousky, C., & Cook, J. (2017). Climate change and its impacts on the housing market. Environmental Science & Policy, 69, 29-40. [3] Huang, X., Chen, H., & Li, Y. (2021). Coastal vulnerability and property values: Evidence from the rising sea levels in the United States. Land Economics, 97(3), 337-355. https://doi.org/ 10.3368/le.97.3.337 [4] Cobián Álvarez, A., & Resosudarmo, B. P. (2019). The cost of floods in developing countries’ megacities: A hedonic price analysis of the Jakarta housing market, Indonesia. Environmental Economics and Policy Studies, 21(4), 607–632. https://doi.org/10.1007/s10018-019-00242-w [5] McEvoy, D., & Lund, J. (2020). Real estate investment in the context of climate risk: Evidence from coastal regions. Climate Change Economics, 11 (4), 85-104. [6] Mayer, C. J., Somerville, C. T., & Smith, K. M. (2019). The long-term effects of climate change on housing prices: a study of regional risks. Journal of Housing Economics, 39, 1-15. https://doi.org/10.1016/ j.jhe.2017.12.001 [7] Glaeser, E. L., & Gyourko, J. (2018). The impact of climate risk on the US housing market: evidence from major cities. Journal of Economic Perspectives, 32 (3), 63-84. https://doi.org/ 10.1257/jep.32.3.63 [8] Jain, M., & Sharma, S. (2020). Green building and its impact on property prices: an analysis of the commercial real estate market. sustainable Cities and Society, 53, 101-115. https: /doi.org/10.1016/j.scs.2019.101115 [9] Pivo, G. (2020). Environmental sustainability and commercial real estate pricing. Journal of Real Estate Research, 42 (2), 221-245. https://doi.org/10.1080/ 10835547.2020.1778575 [10] Eichholtz, P., Kok, N., & Quigley, J. M. (2020). The price of land in the climate change era. Journal of Urban Economics, 117, 103-115. https://doi.org/10.1016/j.jue.2019.103267 [11] Vickery, M., Wei, Y., & Lin, C. (2021). Rising insurance costs and housing demand: a case study of Florida's flood-prone regions. Risk Analysis, 41 (6), 1070-1083. [12] Brody, S. D., & Highfield, W. E. (2018). Examining the role of disaster insurance in the housing market. Risk Analysis, 38 (10), 1980-1993. https://doi.org/10.1111/risa.13004