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House prices and COVID-19 pandemic shocks in India: a nonlinear ARDL analysis

Author

Listed:
  • Niharika Mehta
  • Seema Gupta
  • Shipra Maitra

Abstract

Purpose - India is one of those countries that are severely affected by the COVID-19 pandemic. With the upsurge in the cases, the country recorded high unemployment rates, economic uncertainties and slugging growth rates. This adversely affected the real estate sector in India. As the relation of the housing market with the gross domestic product is quite lasting thus, the decline in housing prices has severely impacted the economic growth of the nation. Hence, the purpose of this paper is to gauge the asymmetric impact of COVID-19 shocks on housing prices in India. Design/methodology/approach - Studies revealed the symmetric impact of macroeconomic variables, and contingencies on housing prices dominate the literature. However, the assumption of linearity fails to apprehend the asymmetric dynamics of the housing sector. Thus, the author uses a nonlinear autoregressive distributed lag model to address this limitation and test the existence of short- and long-run asymmetry. Findings - The findings revealed the long- and short-run asymmetric impact of the COVID-19 outbreak and the peak of the COVID-19 on housing prices. The results indicate that the peak of COVID-19 had a greater impact on housing prices in comparison to the outbreak of COVID-19. This can be explained as prices will revert to normal at a speed of 0.978% with the decline in the number of COVID-19 cases. Whereas the housing prices rise at a rate of 0.714 as a result of government intervention to deal with the ill effects of the COVID-19 outbreak. Moreover, it can be inferred that both the outbreak and peak of COVID-19 will lead to a minimal decline in housing prices, while with the decline in the number of cases and reduction in the impact of the outbreak of COVID, the housing prices will rise at an increasing rate. Originality/value - To the best of the authors’ knowledge, this is the first study to understand the impact of the outbreak and peak of COVID-19 on the housing prices separately.

Suggested Citation

  • Niharika Mehta & Seema Gupta & Shipra Maitra, 2022. "House prices and COVID-19 pandemic shocks in India: a nonlinear ARDL analysis," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 16(3), pages 513-534, June.
    • Handle: RePEc:eme:ijhmap:ijhma-02-2022-0026
    DOI: 10.1108/IJHMA-02-2022-0026
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    More about this item

    Keywords

    India; Housing prices; Asymmetric relationship; NARDL model; Outbreak of COVID-19; Peak of COVID-19; Control variables; B22; C32; R31; I18;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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