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A Quasi-Experiment in Monetary Policy: Fault Lines of Value: The Impact of Earthquake Risk on Istanbul Housing Market

Author

Listed:
  • Oguzhan Cepni
  • Ismail Genc
  • Lokman Gunduz
  • Muhammed Hasan Yilmaz

Abstract

Using a unique dataset of house prices and a difference-in-differences methodology, we find that households in Istanbul reassessed the risks associated with earthquakes following the Kahramanmaraþ Earthquake Sequence on February 6, 2023. The increase in both housing prices and rental rates was relatively subdued in Istanbul neighborhoods with high earthquake risk compared to those in low-risk areas. Furthermore, houses built before the Turkish Earthquake Code of 2007 are heavily discounted in high-risk areas relative to those constructed afterward. Finally, the earthquake risk premium observed in house prices in low-risk areas was smaller in percentage terms for more expensive neighborhoods. These findings have important policy implications for the implementation of earthquake-resistant measures in Turkiye.

Suggested Citation

  • Oguzhan Cepni & Ismail Genc & Lokman Gunduz & Muhammed Hasan Yilmaz, 2025. "A Quasi-Experiment in Monetary Policy: Fault Lines of Value: The Impact of Earthquake Risk on Istanbul Housing Market," Working Papers 2517, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:2517
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2025/25-17
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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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