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Hot Property: A Spatial Analysis of Temperature and Housing Prices in Spain

Author

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  • Adrian Fernández-Pérez

    (Department of Banking and Finance, Michael Smurfit Graduate Business School, University College of Dublin (Ireland))

  • Marta Gómez-Puig

    (Department of Economics and Riskcenter, Universitat de Barcelona (Spain))

  • Simón Sosvilla-Rivero

    (Complutense Institute for Economic Analysis, Universidad Complutense de Madrid (Spain))

Abstract

This study examines the impact of extreme temperatures on housing price dynamics in Spain, considering both direct and indirect effects across geographic space. Using panel data at the provincial level and a spatial econometric model, we find that an increase in the number of days with maximum temperatures exceeding 35 °C (95ºF) over the past year is significantly associated with a decline in both sale and rental prices within the affected province. However, we also identify a positive indirect effect on housing markets in more distant provinces, particularly in the rental sector, consistent with a pattern of temperature-induced house price premium in cooler regions.

Suggested Citation

  • Adrian Fernández-Pérez & Marta Gómez-Puig & Simón Sosvilla-Rivero, 2025. "Hot Property: A Spatial Analysis of Temperature and Housing Prices in Spain," Documentos de Trabajo del ICAE 2025-04, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:2504
    Note: This paper is based on work supported by the Spanish Ministry of Science and Innovation [grants PID2024-157911NB-I00 and TED2021-129891B-I00], the Spanish State Investigation Agency [grant PID2023-146832OB-I00] and Generalitat de Catalunya [grant 2023CLIMA00012].
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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