The Impact of Public Perception of Earthquake Risk on Istanbul's Housing Market

Abstract

This paper examines the impact of public perception of earthquake risk on Istanbul's housing market by investigating the spatial distribution of the average house values and the changes in average house prices in Istanbul between 1995 and 2000. Soil type and distance to the fault lines in the Sea of Marmara are used as proxies for public perception of earthquake risk. The results of regression analysis show that distance from fault lines is an important factor in explaining house values and its impact on house values increased after the 1999 Kocaeli earthquake. Furthermore, there is a quadratic relationship between soil type and house values. However, none of the measures of earthquake risk significantly affect the change in house values. These findings suggest that public perception of earthquake risk enhanced and the public information about earthquake hazard had significant impact on house values.