IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v89y2021ics0166046221000557.html
   My bibliography  Save this article

Epidemic shocks and housing price responses: Evidence from China's urban residential communities

Author

Listed:
  • Liu, Yanan
  • Tang, Yugang

Abstract

This paper evaluates the impact of the COVID-19 epidemic on the real estate market using a community-level panel dataset of 34 major cities in China. We find that the average housing price in communities with COVID-19 infections decreases by approximately 1.3% compared to communities with no confirmed cases. The economic implication is that homebuyers are willing to pay a premium equivalent to approximately 1.3% of the average housing price to avoid health risks. The response of real estate markets to epidemic shocks is heterogeneous in community and city characteristics. Dynamic analysis shows that the declines in home prices, transaction volumes, and rents are all short-lived, returning to their original development paths a few months after the epidemic shock. Public interventions such as community closures and quarantines may have contributed to the rapid recovery of the housing market, reducing the volatility of housing assets in the household sector.

Suggested Citation

  • Liu, Yanan & Tang, Yugang, 2021. "Epidemic shocks and housing price responses: Evidence from China's urban residential communities," Regional Science and Urban Economics, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:regeco:v:89:y:2021:i:c:s0166046221000557
    DOI: 10.1016/j.regsciurbeco.2021.103695
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046221000557
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2021.103695?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David E. Clark & Tim Allison, 1999. "articles: Spent nuclear fuel and residential property values: the influence of proximity, visual cues and public information," Papers in Regional Science, Springer;Regional Science Association International, vol. 78(4), pages 403-421.
    2. Leggett, Christopher G. & Bockstael, Nancy E., 2000. "Evidence of the Effects of Water Quality on Residential Land Prices," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 121-144, March.
    3. Richard Hornbeck & Daniel Keniston, 2017. "Creative Destruction: Barriers to Urban Growth and the Great Boston Fire of 1872," American Economic Review, American Economic Association, vol. 107(6), pages 1365-1398, June.
    4. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    5. Pope, Jaren C., 2008. "Buyer information and the hedonic: The impact of a seller disclosure on the implicit price for airport noise," Journal of Urban Economics, Elsevier, vol. 63(2), pages 498-516, March.
    6. Grislain-Letrémy, Céline & Katossky, Arthur, 2014. "The impact of hazardous industrial facilities on housing prices: A comparison of parametric and semiparametric hedonic price models," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 93-107.
    7. Francke, Marc & Korevaar, Matthijs, 2021. "Housing markets in a pandemic: Evidence from historical outbreaks," Journal of Urban Economics, Elsevier, vol. 123(C).
    8. repec:dau:papers:123456789/14350 is not listed on IDEAS
    9. Wong, Grace, 2008. "Has SARS infected the property market Evidence from Hong Kong," Journal of Urban Economics, Elsevier, vol. 63(1), pages 74-95, January.
    10. Nepal, Mani & Rai, Rajesh K. & Khadayat, Madan S. & Somanathan, E., 2020. "Value of cleaner neighborhoods: Application of hedonic price model in low income context," World Development, Elsevier, vol. 131(C).
    11. Robert A. Simons & Jesse D. Saginor, 2006. "A Meta-Analysis of the Effect of Environmental Contamination and Positive Amenities on Residential Real Estate Values," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 71-104.
    12. Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-227, February.
    13. Jie Chen & Qianjin Hao & Chamna Yoon, 2018. "Measuring the welfare cost of air pollution in Shanghai: evidence from the housing market," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 61(10), pages 1744-1757, August.
    14. Cheung, Ron & Wetherell, Daniel & Whitaker, Stephan, 2018. "Induced earthquakes and housing markets: Evidence from Oklahoma," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 153-166.
    15. Paul Frijters & Benno Torgler & Darshana Rajapaksa & Clevo Wilson & Shunsuke Managi & Vincent Hoang & Boon Lee, 2016. "Flood Risk Information, Actual Floods and Property Values: A Quasi-Experimental Analysis," The Economic Record, The Economic Society of Australia, vol. 92, pages 52-67, June.
    16. Zhu, Hongjia & Deng, Yongheng & Zhu, Rong & He, Xiaobo, 2016. "Fear of nuclear power? Evidence from Fukushima nuclear accident and land markets in China," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 139-154.
    17. Naoi, Michio & Seko, Miki & Sumita, Kazuto, 2009. "Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 658-669, November.
    18. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    19. Ihlanfeldt, Keith & Mayock, Tom, 2010. "Panel data estimates of the effects of different types of crime on housing prices," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 161-172, May.
    20. Kohlhase, Janet E., 1991. "The impact of toxic waste sites on housing values," Journal of Urban Economics, Elsevier, vol. 30(1), pages 1-26, July.
    21. Boustan, Leah Platt & Kahn, Matthew E. & Rhode, Paul W. & Yanguas, Maria Lucia, 2020. "The effect of natural disasters on economic activity in US counties: A century of data," Journal of Urban Economics, Elsevier, vol. 118(C).
    22. Siodla, James, 2015. "Razing San Francisco: The 1906 disaster as a natural experiment in urban redevelopment," Journal of Urban Economics, Elsevier, vol. 89(C), pages 48-61.
    23. Attila Ambrus & Erica Field & Robert Gonzalez, 2020. "Loss in the Time of Cholera: Long-Run Impact of a Disease Epidemic on the Urban Landscape," American Economic Review, American Economic Association, vol. 110(2), pages 475-525, February.
    24. Lucas W. Davis, 2004. "The Effect of Health Risk on Housing Values: Evidence from a Cancer Cluster," American Economic Review, American Economic Association, vol. 94(5), pages 1693-1704, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Walter D'Lima & Luis Arturo Lopez & Archana Pradhan, 2022. "COVID‐19 and housing market effects: Evidence from U.S. shutdown orders," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(2), pages 303-339, June.
    2. Shian Zeng & Chengdong Yi, 2022. "Impact of the COVID-19 pandemic on the housing market at the epicenter of the outbreak in China," SN Business & Economics, Springer, vol. 2(6), pages 1-20, June.
    3. Huang, Naqun & Pang, Jindong & Yang, Yanmin, 2023. "JUE Insight: COVID-19 and household preference for urban density in China," Journal of Urban Economics, Elsevier, vol. 133(C).
    4. van Vuuren, Aico, 2023. "Is there a diminishing willingness to pay for consumption amenities as a result of the Covid-19 pandemic?," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    5. Eduard Hromada, 2021. "Regression analysis of selected technical and economic parameters of the residential market in the Czech Republic," Proceedings of Business and Management Conferences 12713384, International Institute of Social and Economic Sciences.
    6. Batalha, Mafalda & Gonçalves, Duarte & Peralta, Susana & Pereira dos Santos, João, 2022. "The virus that devastated tourism: The impact of covid-19 on the housing market," Regional Science and Urban Economics, Elsevier, vol. 95(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    2. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    3. Ahlfeldt, Gabriel M. & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease vs. noise: Long-run changes in the value of transport (dis)amenities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    4. Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2008. "Hedonic Price Functions: Guidance On Empirical Specification," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6555, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Lindgren, Samuel, 2018. "Traffic Noise and Housing Values: Evidence from an Airport Concession Renewal," Working papers in Transport Economics 2018:15, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 26 Feb 2019.
    6. Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2010. "Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities?," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 145-160, November.
    7. Edward W. Pinchbeck & Sefi Roth & Nikodem Szumilo & Enrico Vanino, 2023. "The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(6), pages 1439-1473.
    8. Gabriel M. Ahlfeldt & Volker Nitsch & Nicolai Wendland, 2019. "Ease versus noise: long-run changes in the value of transport (dis)amenities," CEP Discussion Papers dp1631, Centre for Economic Performance, LSE.
    9. Sunak, Yasin & Madlener, Reinhard, 2012. "The Impact of Wind Farms on Property Values: A Geographically Weighted Hedonic Pricing Model," FCN Working Papers 3/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised Mar 2013.
    10. Giuliano Masiero & Michael Santarossa, 2020. "Earthquakes, grants, and public expenditure: How municipalities respond to natural disasters," Journal of Regional Science, Wiley Blackwell, vol. 60(3), pages 481-516, June.
    11. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Centre for Economic Performance, LSE.
    12. Paul Dolan & Robert Metcalfe, 2008. "Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods," CEP Discussion Papers dp0890, Centre for Economic Performance, LSE.
    13. Gibbons, Stephen & Heblich, Stephan & Timmins, Christopher, 2021. "Market tremors: Shale gas exploration, earthquakes, and their impact on house prices," Journal of Urban Economics, Elsevier, vol. 122(C).
    14. Kathrine Graevenitz & Daniel Römer & Alexander Rohlf, 2018. "The Effect of Emission Information on Housing Prices: Quasi-Experimental Evidence from the European Pollutant Release and Transfer Register," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 23-74, January.
    15. Lucas W. Davis, 2008. "The Effect of Power Plants on Local Housing Values and Rents: Evidence from Restricted Census Microdata," Working Papers 0809, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
    16. Henrik Andersson & Emmanuelle Lavaine, 2018. "Nitrates and property values: evidence from a french market intervention," Working Papers hal-01947415, HAL.
    17. Yasin Sunak & Reinhard Madlener, 2017. "The impact of wind farms on property values: A locally weighted hedonic pricing model," Papers in Regional Science, Wiley Blackwell, vol. 96(2), pages 423-444, June.
    18. Christopher F. Parmeter & Jaren C. Pope, 2013. "Quasi-experiments and hedonic property value methods," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 1, pages 3-66, Edward Elgar Publishing.
    19. Pinchbeck, Edward W. & Roth, Sefi & Szumilo, Nikodem & Vanino, Enrico, 2020. "The Price of Indoor Air Pollution: Evidence from Radon Maps and the Housing Market," IZA Discussion Papers 13655, Institute of Labor Economics (IZA).
    20. Gabriel Ahlfeldt & Volker Nitsch & Nicolai Wendland, 2016. "Ease vs. Noise: On the Conflicting Effects of Transportation Infrastructure," CESifo Working Paper Series 6058, CESifo.

    More about this item

    Keywords

    COVID-19; Housing price; Rental price; Negative externality; Public intervention;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:89:y:2021:i:c:s0166046221000557. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.