The Impact of Fire Accidents and Fire Hazard District on Housing Price

This study investigates the impact of fire accidents within Seoul on the local housing prices by using the spatial difference-in-differences method. We find that the average decrease of housing price amounts to 9.6% following the fire accident. Utilizing the two-stage difference-in-differences (DID2S) analysis, we confirme common trends assumption and the dynamic effects of our results. Heterogeneity analysis shows that psychological changes in housing consumers caused by fatal fire accidents can result in a drop in asset value. Furthermore, we suggest that the introduction of fire hazard districts could significantly alleviate the decrease in housing prices, showing that fire protection policies can mitigate the negative externalities in the housing market due to fire accidents.