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Published in:
Introduction: Purpose and Organization of This Book Read chapter Read first chapter

2019 | OriginalPaper | Chapter

9. Valuation of Earthquake Risk in Housing Markets

Author : Miki Seko

Published in: Housing Markets and Household Behavior in Japan

Publisher: Springer Singapore

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Abstract

The relationships between seismic risk and rental and owner-occupied housing prices in all Japan are examined. Empirical results from hedonic regressions with earthquake risk indices suggest that (1) the earthquake occurrence probability has significantly negative effect on the monthly housing rent, (2) the effect of earthquake probability in the owner-occupied housing market is not so clear as in the rental market, (3) the estimated risk premium is larger for steel-framed concrete apartments, and (4) the share of quake-resistant dwellings in the neighborhood area is significantly and positively related to the housing price of the individual unit. These results suggest that anti-seismic policies targeting specific groups of dwellings—such as rental houses—help to mitigate the welfare loss due to the earthquake loss.

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previous chapter Earthquake Risk and a Quality of Life Index
next chapter Consumer Valuation of Earthquake Risk Before and After Massive Earthquakes
Footnotes
1
The latter measure of housing price is constructed from the question about subjective assessment of the value of current residence (“How much do you think this lot/house would sell for on today’s market?”).
 
2
The original data are available at http://​www.​j-shis.​bosai.​go.​jp/​, accessed August 31, 2009.
 
3
The JMA seismic intensity scale, which is measured with a seismic intensity meter, provides a measure of the strength of seismic motion. The typical situations and damages caused by the earthquake with JMA seismic intensity \(6^{ - }\) are as follows: People are difficult to keep standing, wooden houses occasionally collapse, and walls and pillars may be damaged even for highly earthquake-resistant houses. For full explanation of the JMA seismic intensity scale, see http://​www.​jma.​go.​jp/​jma/​kishou/​know/​shindo/​explane.​html.
 
4
This is because, in the KHPS, the information about the respondent’s location of residence is reported at the city/county-levels. The city-level averages of earthquake occurrence probabilities are calculated by ArcView 9.0.
 
5
A set of dwelling characteristics and dummy variables for regions and survey years is also controlled but is omitted from the results. Dwelling characteristics included are: age of the dwelling (years since built), number of rooms, number of stories of the building, time-distance from the nearest railway station/bus stop, garden space (for detached houses), floor in which the unit is located (for condominium units), and dummies for the type of dwelling. The complete results are available upon request.
 
6
Nakagawa et al. (2007) report that the risk premium is about 3–6% of the housing value.
 
7
The actual estimate is \(- 199.75\) (in 10,000 yen).
 
8
See Naoi et al. (2010) Sects. 4.2 and 4.3 for results about changes in effects of earthquake risk over time and by age of building.
 
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Metadata
Title
Valuation of Earthquake Risk in Housing Markets
Author
Miki Seko
Copyright Year
2019
Publisher
Springer Singapore
Book
Housing Markets and Household Behavior in Japan

Print ISBN: 978-981-13-3368-2

Electronic ISBN: 978-981-13-3369-9

Copyright Year: 2019

DOI
https://doi.org/10.1007/978-981-13-3369-9_9