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Heat Waves and Housing Markets: Assessing the Effects on Real Estate Prices in China

Author

Listed:
  • Fanglin Chen

    (Peking University)

  • Jie Zhang

    (Jinan University)

  • Zhongfei Chen

    (Jinan University)

Abstract

The risks brought about by climate change are complex and varied. A comprehensive study of the economic impact of climate change on various industries can help take proactive measures to enhance economic resilience. We use the panel data samples of monthly data at city level from 2010 to 2020 in China to explore the effects and mechanisms of heatwaves on real estate prices. Our research finds that for every 1 unit increase in standardized temperature, it will reduce housing prices by approximately CNY110 per square meter. The heterogeneity analyses indicate that in inland areas, areas with high fiscal pressure, and good development of the primary industry, this impact is even stronger. In addition, the exploration of potential mechanisms indicates that extreme high temperatures will reduce the proportion of employed people in the secondary industry, increase the proportion of employed people in the tertiary industry, reduce employment opportunities, inhibit agricultural development, and lower the willingness of foreign investment. These factors will lead to a decrease in housing prices from the demand side. This study analyzed the potential impact of climate risk on property value, contributing to a better understanding of the uncertain market environment.

Suggested Citation

  • Fanglin Chen & Jie Zhang & Zhongfei Chen, 2025. "Heat Waves and Housing Markets: Assessing the Effects on Real Estate Prices in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(6), pages 1541-1579, June.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:6:d:10.1007_s10640-025-00975-1
    DOI: 10.1007/s10640-025-00975-1
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    More about this item

    Keywords

    Climate change; Extreme events; House price; Real estate prices;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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