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Spillovers in Asset Prices: The Curious Case of Haunted Houses

Author

Listed:
  • Utpal Bhattacharya

    (Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

  • Daisy Huang

    (Nanjing Audit University)

  • Kasper Meisner Nielsen

    (Institute for Emerging Market Studies, Hong Kong University of Science and Technology)

Abstract

Exploiting the unique institutional setting of Hong Kong's real estate market, we uncover a curious ripple effect of haunted houses on the prices of nearby houses. Prices drop on average 20% for units that become haunted, 5% for units on the same floor, 3% for units in the same block, and 1% for units in the same estate. Our study makes two contributions. First, our results provide an estimate of a large negative spillover on asset prices caused by an idiosyncratic shock to the perceived quality of an asset. Second, since we observe that this ripple effect exists even if the haunted house is not sold, we can isolate the quality channel from the price pressure channel. We find that the quality channel contributes significantly to spillovers in asset prices.

Suggested Citation

  • Utpal Bhattacharya & Daisy Huang & Kasper Meisner Nielsen, 2019. "Spillovers in Asset Prices: The Curious Case of Haunted Houses," HKUST IEMS Working Paper Series 2019-63, HKUST Institute for Emerging Market Studies, revised May 2019.
    • Handle: RePEc:hku:wpaper:201963
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    File URL: https://iems.ust.hk/assets/publications/working-papers-2019/iemswp2019-63.pdf
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    References listed on IDEAS

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    Cited by:

    1. Marcel Fischer & Roland Füss & Simon Stehle, 2021. "Local house price comovements," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 169-198, March.

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