Secure housing in Turkey in the course of development of integrated disaster management

Risk of disaster is a well-known fact and a reality for people in Turkey. In order to reduce the risk against the life safety and the economy, public authorities have been implementing specifications for building construction and urban transformation projects for the existing buildings and for new ones. The objective is to ensure safe living homes for families by the Turkish construction industry. In the case where potential buyers have all the information regarding the durability of a property and expected costs regarding property maintenance, they would reflect these constraints in their preferences while maximizing utility. Sellers would maximize their profit by constructing resistant dwellings and the transaction would take place at a price where Willingness-to-Accept is equal to Willingness-to-Pay. In areas with higher frequencies of earthquakes, the differences in prices between homes built before these specifications and after them will show the demand by the people to invest in safer building projects. Under these assumptions of information and rational decision making, there would be no need for government intervention. Information regarding the earthquake resistance would be conveyed through prices in the market. Earthquake occurrence itself brings a possibility of damage to an unknown extent to buyers in the housing market and resistance quality of the dwelling might not be directly observable. This study investigates whether prices are able to convey the information on the resistance of dwelling and its impact on reducing the uncertainty in quality of such buildings. According to the neo-classical economic model, in the absence of information asymmetry in the market and when the market actors act rationally, state regulations on earthquake resistant housing production will not be needed. The aim of this study is to test whether the buyers or renters in the housing market include the indicators of earthquake resistance in their pricing decisions, as the neo-classical economics model assumes. For this purpose, by using the data from 2010 and 2011 TÜİK Household Budget Survey, the answer to the question: "are individuals willing to pay a premium for potentially earthquake resistant dwellings?" and the pricing of the buildings constructed after the earthquake regulations compared to the buildings constructed before, were investigated.