Mot nya höjder! En studie om klimateffekter och fastighetspriser
(2024) NEKH02 20241Department of Economics
- Abstract
- This study examines the effect of climate change on real estate prices. There is reason to believe that climate change should cause some kind of effect since several price-influencing mechanisms arise: on one hand the established economic law of supply and demand where price on real estate see a positive effect due to diminishing supply, on the other hand a negative effect in the form of an increased risk premium due to increased risk of severe climate-related damages while the possibility of insuring against this risk decreases.
In order to examine this price effect, the aggregate purchasing price coefficient for each
municipality of Skåne has been analyzed through a difference-in-differences (DID) technique. The study focuses on... (More) - This study examines the effect of climate change on real estate prices. There is reason to believe that climate change should cause some kind of effect since several price-influencing mechanisms arise: on one hand the established economic law of supply and demand where price on real estate see a positive effect due to diminishing supply, on the other hand a negative effect in the form of an increased risk premium due to increased risk of severe climate-related damages while the possibility of insuring against this risk decreases.
In order to examine this price effect, the aggregate purchasing price coefficient for each
municipality of Skåne has been analyzed through a difference-in-differences (DID) technique. The study focuses on single family homes over the three-year period 2017 – 2019, where 2018 is of particular interest, since one of the major Swedish insurance companies then decided to no longer provide insurance for newly built houses in areas where The County Administrative Board considers land to be unsuitable from a risk point of view.
The object of interest in this study is Kristianstad (treatment group), since its topographic conditions make it particularly vulnerable to heavy rain, flood and sea level rise. Price change of real estate in Kristianstad is compared to the other 32 municipalities of Skåne (control group).
The outcome of the DID-regression is then analyzed from economic, psychological, and
sociological models such as the dynamics of supply and demand, information asymmetry,
cognitive bias, and the theory of the economic man.
The results indicate that climate related risk is not priced into properties in Kristianstad municipality. These results are in line with previous research that has proven ambiguous when it comes to assessing both the existence and extent of climate change’s impact on property prices. Further research is required and encouraged since vast socioeconomic values are at stake and climate change shows no sign of abating. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9156168
- author
- Rikse, Markus LU
- supervisor
- organization
- course
- NEKH02 20241
- year
- 2024
- type
- M2 - Bachelor Degree
- subject
- keywords
- climate change, klimatförändringar, property prices, fastighetspriser, Kristianstad
- language
- Swedish
- id
- 9156168
- date added to LUP
- 2024-09-24 09:00:07
- date last changed
- 2024-09-24 09:00:07
@misc{9156168,
abstract = {{This study examines the effect of climate change on real estate prices. There is reason to believe that climate change should cause some kind of effect since several price-influencing mechanisms arise: on one hand the established economic law of supply and demand where price on real estate see a positive effect due to diminishing supply, on the other hand a negative effect in the form of an increased risk premium due to increased risk of severe climate-related damages while the possibility of insuring against this risk decreases.
In order to examine this price effect, the aggregate purchasing price coefficient for each
municipality of Skåne has been analyzed through a difference-in-differences (DID) technique. The study focuses on single family homes over the three-year period 2017 – 2019, where 2018 is of particular interest, since one of the major Swedish insurance companies then decided to no longer provide insurance for newly built houses in areas where The County Administrative Board considers land to be unsuitable from a risk point of view.
The object of interest in this study is Kristianstad (treatment group), since its topographic conditions make it particularly vulnerable to heavy rain, flood and sea level rise. Price change of real estate in Kristianstad is compared to the other 32 municipalities of Skåne (control group).
The outcome of the DID-regression is then analyzed from economic, psychological, and
sociological models such as the dynamics of supply and demand, information asymmetry,
cognitive bias, and the theory of the economic man.
The results indicate that climate related risk is not priced into properties in Kristianstad municipality. These results are in line with previous research that has proven ambiguous when it comes to assessing both the existence and extent of climate change’s impact on property prices. Further research is required and encouraged since vast socioeconomic values are at stake and climate change shows no sign of abating.}},
author = {{Rikse, Markus}},
language = {{swe}},
note = {{Student Paper}},
title = {{Mot nya höjder! En studie om klimateffekter och fastighetspriser}},
year = {{2024}},
}