The impact of crime on housing prices in Spain during the recovery period in the real estate sector following the 2008 economic crisis

Abstract

Purpose

The aim of this paper is to analyse the relationship of crime on housing prices during the economic recovery of the housing sector in Spain (2014–2019).

Design/methodology/approach

For this purpose, it is used a regional panel data in first differences for the period 2014–2019 in order to control the endogeneity and multicollinearity that these models usually present in the empirical literature.

Findings

The results show that it takes between one and two years for housing prices in Spain to respond negatively to an increase in crime. Of the eight types of crime analysed, only four of them establish statistically significant relationships with housing prices, while robbery with violence (−2.2%) and burglary with forced entry (−0.5%) have the greatest negative impact on housing prices. Lastly, the results highlight the fact that the category “other crimes against property” – which includes squatting – is the only crime typology that has an immediate effect on housing prices (−1.7%).

Practical implications

These results demonstrate that the more serious property crimes have a greater quantitative negative impact on housing prices. These crimes combine both a violent nature and the fact that they affect property, thus generally causing greater harm to individuals’ emotional well-being and perception of criminality. These findings have direct implications for crime prevention strategies, as the housing market in Spain appears to be more affected by this type of criminal activity. Consequently, public institutions should focus their efforts on mitigating these crimes.

Originality/value

This is the first study that examines the role of crime in the recovery of the real estate sector in Spain following the economic crisis of 2008. It is also one of the pioneering works for the European context, utilizing a panel data approach with first differences and incorporating various types of criminal activities within the same model.

Citation

Torres-Tellez, J. and Montero Soler, A. (2024), "The impact of crime on housing prices in Spain during the recovery period in the real estate sector following the 2008 economic crisis", Journal of European Real Estate Research, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JERER-07-2023-0023