Fault Lines of Value: The Impact of Earthquake Risk on Istanbul Housing Market

Abstract

Using a unique dataset of house prices and rents and a difference-in-differences methodology, we provide evidence consistent with a reassessment of earthquake-related risks in Istanbul following the Kahramanmaras Earthquake Sequence on February 6, 2023. We find that post-earthquake increases in both house prices and rents were relatively more subdued in high-risk neighborhoods than in lower-risk neighborhoods, suggesting that seismic safety became more strongly capitalized into housing-market outcomes after the earthquake. Furthermore, houses built before the Turkish Earthquake Code of 2007 are discounted more strongly in high-risk areas relative to newer properties, highlighting the importance of building standards in shaping market responses to seismic risk. Finally, the post-earthquake premium associated with lower-risk locations is less pronounced in neighborhoods with considerably higher socio-economic status. These findings have important policy implications for earthquake-risk disclosure, building-code enforcement, and earthquake-resilience policies in Türkiye.