Impact of the 2011 earthquake on the real estate market in Tokyo

Abstract

After the 2011 Great East Japan Earthquake, seismic activity in Japan changed drastically, affecting people’s response to earthquakes even outside the affected area. This change may be heterogeneous depending on where they live, especially if the area is prone to seismic hazards. To measure seismic hazards, the nature of the ground on which a building stands was used as a source of people’s assessment of disaster. Using real estate transaction data and the hedonic approach, this study investigates the heterogeneous impact of the Great East Japan Earthquake on the real estate market in undamaged areas. The analysis of ground classification revealed that the Great East Japan Earthquake led to about 3 % reduction in both land prices and housing prices in the lowland areas in the Tokyo Special Zone, where ground was soft and experienced stronger shaking compared with other areas. The reduction lasted for 5 years before recovering to the pre-disaster level. However, the 2016 Kumamoto Earthquake did not impact land prices in the Tokyo Special Zone.