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The Effect of Volcanic Smog on Real Estate: Insights from the 2023 Taal Volcano Activity


Date: September 26,2023

Source: CNN Philippines

Volcanic eruptions are natural phenomena that can have far-reaching effects on the environment, communities, and various sectors, including real estate. The recent volcanic activity around Taal Volcano in the Philippines in 2023 has once again brought to light the significant impact that volcanic smog, or "vog," can have on the real estate market in the affected regions. In this blog, we will delve into the effects of volcanic smog on real estate and discuss the situation in the context of the 2023 Taal Volcano activity.

The Ongoing Volcanic Activity

Following the eruption of Taal Volcano in 2020, many cities and municipalities surrounding Taal Lake experienced severe disruptions. While recovery efforts were underway, businesses in the region slowed down considerably. Geophysicist Jacques Zlotnicki, in an interview with Nature Research Journal, warned that despite the appearance of calm, the region remained susceptible to earthquakes and land fissures. Reports from Philvolcs (Philippine Institute of Volcanology and Seismology) also noted concerning changes in the landscape, including sulfur dioxide emissions and unusual geological activity.

The Historical Perspective

Source: Philippine Star

To understand the potential consequences of such volcanic activity on real estate, it's essential to look back at the historical context. Taal's 1754 eruption, as documented by Augustinian priest Father Buencochillo, lasted almost seven months, making it one of the most prolonged eruptions in the region's history. It began with a phreatic eruption, similar to the 2020 event, but escalated into a violent eruption in November, resulting in extensive ashfall, destruction, and topographical changes.

Impact on Real Estate

The 2023 Taal Volcano activity serves as a sobering reminder of the potential long-term effects on real estate in high-risk areas. Here are some key considerations:

1. Decreased Demand: The demand for properties in high-risk areas, including Tagaytay and neighboring municipalities, may decrease significantly. Potential buyers and investors may be hesitant due to the increased risks associated with living or investing in such hazardous conditions.

2. Price Adjustments: Real estate pricing in affected regions may experience a decline as sellers try to attract buyers despite the inherent risks. Buyers are likely to negotiate lower prices, leading to a potential drop in property values.

3. Interest Rates: Lenders may respond to the increased risk by temporarily raising interest rates for mortgages in the affected areas. This can further deter potential buyers from investing in the region.

4. Government Response: The response of local and national governments plays a crucial role in the real estate market's resilience. Effective disaster management and infrastructure development can mitigate some concerns, but sustained volcanic activity can still pose long-term challenges.

Differentiating Volcanic Smog from Other Forms of Air Pollution

It's important to differentiate between volcanic smog (vog) and other forms of air pollution. In the case of the recent smog in the National Capital Region (NCR), it was caused by conventional air pollution rather than volcanic activity. Ma. Antonia Bornas of Phivolcs clarified that the smog resulted from pollution trapped in the lower atmosphere and was not related to the Taal Volcano eruption. Understanding these distinctions helps in accurately assessing the impact and causes of smog, enabling effective measures to mitigate its effects on the environment and public health.

The 2023 Taal Volcano activity underscores the importance of considering the potential consequences of volcanic eruptions and their associated smog on the real estate market. While the immediate effects may be visible in terms of decreased demand and property values, the long-term impact depends on various factors, including government response and the duration of volcanic activity. To protect the interests of both property owners and prospective buyers, it is essential to stay informed about the evolving situation and adapt real estate strategies accordingly.




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