Assessing the impact of wildfires on the Swedish housing market: a case study of the 2014 Västmanland wildfire

The study investigates how the largest wildfire in Sweden's recent history, the 2014 wildfire in Västmanland County, affected nearby housing prices and time-on-market, addressing a significant gap in the literature given that existing research on wildfires and residential property prices is limited and primarily focuses on events in North America. With Sweden holding the largest forest area in the entire EU, understanding this impact is particularly relevant in a Swedish context. Using a difference-in-differences method, the research examines the relationship between wildfire exposure and property values, offering one of the first European contributions to this underexplored field.

The findings demonstrate that the 2014 wildfire had a significant negative effect on housing prices, with the most conservative estimate indicating an approximate 2.7% reduction in final selling prices for post-fire sales located within 20 km of the wildfire area. The negative effect is even larger when defining the treated area as 5 km (-10.1%) or 10 km (-8.9%) distance to the fire, results confirmed by a repeated sales model including only single- and multi-family houses. A heterogeneity assessment further reveals that these effects are mostly driven by single-family houses rather than apartments, with the largest price impact occurring in the first months after the event and for properties located along the trajectory of the wildfire's smoke.