Spatial Differentiation of Urban Property Prices as a Repercussion in the Aftermath of a Civil Disorder Incident: The 2011 London Case

Abstract

Purpose:The purpose of the paper is to explore possible consequences on property prices in areas of London, ensuing the civil unrest of 2011. Design/Methodology/Approach: We studied the repercussion of the civil unrest on real estate prices through the application a difference in differences method of analysis. The case of London was chosen due to its well-developed property market and the availability of adequate, high quality and detailed data needed for this purpose. Findings: It was found that up to one year period after the end of the unrest, the effect seems to be statistically insignificant. The findings further suggest, that during the second and third year from the end of the turmoil, the civil unrest led to an approximately 5% decline in property prices in the affected areas of London. Practical Implications: This research study is an attempt to quantify the impact of London 2011 riots on property prices. The duration of the effect reflecting people's perception regarding the risk associated with investing in these areas has not been determined. Riots combine the economic and the social impact. Originality/Value: Policy makers can better understand and estimate the repercussions of how urban economies interact with population and absorb localized ephemeral events. In that sense, it can be a vital aid in the hands of the administration in its duties to shape a more balanced and harmonic urban environment. Every shock though has its own distinct characteristics and doesn't affect the spatial dynamics in a uniform fashion across time.