The Effect of Terrorism on Housing Rental Prices: Evidence from Jerusalem

06/09/2018 |  Ben Itzhak Nadav
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The Economy and Economic Activity


This research investigates the effect of terrorism on housing rental prices. September
2015 was the beginning of a new large-scale terror wave in Israel, hitting
Jerusalem more than any other major city. Considering this terror wave as an
exogenous shock to the housing rental market in Jerusalem, this study analyzes its
effect on rental prices compared to Tel-Aviv and within Jerusalem. Immediately
after the beginning of the terror wave, rental prices in Jerusalem declined, compared
to Tel-Aviv, reaching a 2%-3% decrease within a year. Within Jerusalem,
the results indicate that proximity of an additional one kilometer to suspected origins
of terror incidents, such as the Green Line and Damascus Gate, resulted in a
0.3%-0.4% decline in rental prices.