The Economic Consequences of Insecure Property Rights

<jats:p>Secure property rights support efficient allocation and investment, yet their effects in affluent urban markets remain understudied. We examine Jerusalem properties built on church-owned land under 99-year leases approaching expiration, creating substantial legal and political uncertainty. Using all residential transactions from 2004–2024, we compare nearby properties with secure and insecure rights within the same blocks. Insecure rights reduce transaction likelihood by about 20 percent and prices by 10–15 percent on average, revealing large costs of legal uncertainty. A present-value framework implies that market participants assign a substantial, but far from certain, probability to losing rights.</jats:p>