Empirical Analysis of the Impact of the Great East Japan Earthquake and Effect of Estimated Tsunami Inundation on Real Estate Transactions

Abstract

Hedonic pricing models show that house value capitalizes on risk factors, such as tsunami inundation zone, and properties at low risk have more value. People understood the impact of a tsunami on society after the Great East Japan Earthquake, 2011 and the subsequent tsunami caused by it. The revision of the estimated tsunami inundation after 2011 encouraged the residents of such areas to be prepared for future tsunamis. In this paper, based on the 2011 event, we examine the effects of tsunami risk on housing property values using spatial autoregressive error models. The results demonstrate that tsunami risk started negatively impacting the housing prices after the 2011 events. Considering the increasing natural disasters and population decline in Japan, citizens' housing preferences do not indicate support for compact city.