Ame Cho
Gran Sasso Science Institute (GSSI), L’Aquila, Italy
Sofie R. Waltl
University of Cambridge, UK
Abstract
We study how the 2009 L’Aquila earthquake changed the capitalisation of seismic risk and realised damage into residential and commercial property values in central Italy. Using semi-annual OMI data on sales prices and rents for 1,131 municipalities in five regions from 2004 to 2025, we estimate hedonic event-study models that trace the price and rent differentials of officially designated high-risk municipalities and of damaged municipalities over time. We find no evidence of a post-earthquake risk discount. Instead, quality-adjusted values in high-risk municipalities rose by about 5–10% relative to lower-risk municipalities after 2009, with the strongest response in residential rents. Damaged municipalities, which traded at a discount of up to 12% before the earthquake, caught up gradually from 2012 onwards, consistent with reconstruction and public investment. Only residential rents show a significant attenuation after the 2016 Central Italy earthquakes. In the aftermath of a major disaster, reconstruction-driven local adjustment appears to dominate risk salience in market prices.
JEL: R31, R33, Q54, D83
Keywords: Earthquake risk; Risk salience; Natural disasters; Hedonic pricing; Commercial and residential real estate; Italy
Dissemination
Presentations: [5th Workshop on Residential Housing Markets: Climate Risks and Affordability, Pembroke College, University of Cambridge]
