The Effects of Heat Waves and Drought on the Housing Market in Europe

Historic heatwaves and droughts have made Europe suffer this summer, which has been signified by scorching heat, devastating forest blazes, a decrease in precipitation and low levels of rivers and lakes.

The prolonged extreme weather is taking a heavy toll on European countries, which are still beset by rising prices.

In the context of real estate, it’s no surprise that property values could fall if these conditions persist.

Experts highlighted that climate change is mainly responsible for these prolonged droughts. Relevant to this, real-estate decision-makers need the right and reliable tools to adapt to climate change.

Summer 2022 in Europe

Europe’s record-breaking heat has endured the region with heatwaves and droughts and promoted authorities to restrict water use. The smouldering heat is also spreading catastrophic wildfires across the continent. As of July 20, an estimated 1,977 wildfires have fueled across the region in 2022 – almost 3x the average amount, according to historical data from the European Forest Fire Information System. 

Climate Risks for Real Estate: Drought and Heatwaves in Europe 

Unprecedented temperatures in Europe this summer have disrupted transportation, displaced thousands of people, and resulted in hundreds of heat-related deaths. The heat has also exacerbated wildfires, which have grown more devastating in recent years. 

Drought conditions drive people to move out of the state and discourage new residents from moving in.

Countries, including Spain, face the challenge of shrinking populations in rural areas as people move to cities, leaving a smaller workforce to clear vegetation and dry scrub that spark forest fires. 

Climate change has a substantial influence on real estate markets.

It can directly damage individual buildings, decrease their value or even lead to assets being rendered unusable. Climate change has also been found to affect mortgage rates, especially in areas that are prone to extreme weather. Because of the unfortunate combination of climate change and the global pandemic, building a new home or remodelling an existing one today are more costly than ever. 

According to a study by Four Twenty Seven, the urban heat island effect and worsening air quality will exacerbate the impacts of increasing average temperatures in many European cities, with implications for human health and economies.

Heat stress can increase operations costs at real estate assets with new cooling needs for buildings. In particular, assets like data centres and retirement residences with significant cooling needs. 

Climate Intelligence for Real Estate

Real estate resilience across assets is a must to ensure business continuity and prevent financial losses. Understanding asset risk in the time of climate change is the first step toward real estate resilience. Asset owners and managers can leverage asset-risk exposure data, alongside an awareness of regional adaptation efforts, to improve the resilience of their assets and engage communities around shared resilience priorities. 

Climate fintech companies like CLIMATIG uses climate intelligence to build next-level real estate investment portfolios for assets within Europe.

The startup can help asset owners, managers, home buyers and renters to:

  1. Measure and manage the impact of climate change: CLIMATIG runs cost predictions involving extreme weather events so stakeholders can understand the potential impact of climate risks on revenue, operating costs, capital cost, and capitalisation rate. 
  2. Avoid the uninsurable: CLIMATIG can check climate hazards and the cost of their aftermath up until 2100. 
  3. Attract more buyers and investors: CLIMATIG allows users to publish smart data-backed climate risk scores and maintenance cost portfolios. 
  4. Find the best place to work and live: CLIMATIG rates establishments based on their exposures to climate hazards. The startup can help home buyers/renters to avoid high risk areas and find safer communities.
  5. Protect assets from climate disasters: CLIMATIG can calculate precise maintenance costs in properties with just a few clicks allowing homeowners to set aside the right amount of emergency funds or to find the best insurance policy.
  6. Live a low-carbon lifestyle: Artificial Intelligence will empower users by understanding climate change and how it can affect their society. More so, their own family. CLIMATIG gives everyone the access to measure the risks of climate hazards and confidently prepare ahead to alleviate the impact of extreme weather events. 


Real estate assets are already experiencing the impact of climate change like extreme heat across Europe this summer. The real estate industry will continue to be impacted by climate change in the coming years. At the same time, climate fintech companies like CLIMATIG are offersing solutions with targeted adaptation measures against climate risks. The good thing about it, is their climate intelligence platform is literally made for everyone.


Photo by David McBee on Pexels

Contact sales