IDEAS home Printed from https://ideas.repec.org/a/gam/jscscx/v9y2020i7p114-d380577.html
   My bibliography  Save this article

COVID-19 Infects Real Estate Markets: Short and Mid-Run Effects on Housing Prices in Campania Region (Italy)

Author

Listed:
  • Vincenzo Del Giudice

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

  • Pierfrancesco De Paola

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

  • Francesco Paolo Del Giudice

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

Abstract

The COVID-19 (also called “SARS-CoV-2”) pandemic is causing a dramatic reduction in consumption, with a further drop in prices and a decrease in workers’ per capita income. To this will be added an increase in unemployment, which will further depress consumption. The real estate market, as for other productive and commercial sectors, in the short and mid-run, will not tend to move independently from the context of the aforementioned economic variables. The effect of pandemics or health emergencies on housing markets is an unexplored topic in international literature. For this reason, firstly, the few specific studies found are reported and, by analogy, studies on the effects of terrorism attacks and natural disasters on real estate prices are examined too. Subsequently, beginning from the real estate dynamics and economic indicators of the Campania region before the COVID-19 emergency, the current COVID-19 scenario is defined (focusing on unemployment, personal and household income, real estate judicial execution, real estate dynamics). Finally, a real estate pricing model is developed, evaluating the short and mid-run COVID-19 effects on housing prices. To predict possible changes in the mid-run of real estate judicial execution and real estate dynamics, the economic model of Lotka–Volterra (also known as the “prey–predator” model) was applied. Results of the model indicate a housing prices drop of 4.16% in the short-run and 6.49% in the mid-run (late 2020–early 2021).

Suggested Citation

  • Vincenzo Del Giudice & Pierfrancesco De Paola & Francesco Paolo Del Giudice, 2020. "COVID-19 Infects Real Estate Markets: Short and Mid-Run Effects on Housing Prices in Campania Region (Italy)," Social Sciences, MDPI, vol. 9(7), pages 1-18, July.
    • Handle: RePEc:gam:jscscx:v:9:y:2020:i:7:p:114-:d:380577
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2076-0760/9/7/114/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2076-0760/9/7/114/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vincenzo Del Giudice & Pierfrancesco De Paola & Torrieri Francesca & Peter J. Nijkamp & Aviad Shapira, 2019. "Real Estate Investment Choices and Decision Support Systems," Sustainability, MDPI, vol. 11(11), pages 1-18, June.
    2. Vincenzo Del Giudice & Pierfrancesco De Paola & Benedetto Manganelli & Fabiana Forte, 2017. "The Monetary Valuation of Environmental Externalities through the Analysis of Real Estate Prices," Sustainability, MDPI, vol. 9(2), pages 1-16, February.
    3. Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
    4. Arbel, Yuval & Ben-Shahar, Danny & Gabriel, Stuart & Tobol, Yossef, 2010. "The local cost of terror: Effects of the second Palestinian Intifada on Jerusalem house prices," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 415-426, November.
    5. Abadie, Alberto & Dermisi, Sofia, 2008. "Is terrorism eroding agglomeration economies in Central Business Districts? Lessons from the office real estate market in downtown Chicago," Journal of Urban Economics, Elsevier, vol. 64(2), pages 451-463, September.
    6. V. Smith & Jared Carbone & Jaren Pope & Daniel Hallstrom & Michael Darden, 2006. "Adjusting to natural disasters," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 37-54, September.
    7. Hallstrom, Daniel G. & Smith, V. Kerry, 2005. "Market responses to hurricanes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 541-561, November.
    8. 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.
    9. J. A. Giesecke & W. J. Burns & A. Barrett & E. Bayrak & A. Rose & P. Slovic & M. Suher, 2012. "Assessment of the Regional Economic Impacts of Catastrophic Events: CGE Analysis of Resource Loss and Behavioral Effects of an RDD Attack Scenario," Risk Analysis, John Wiley & Sons, vol. 32(4), pages 583-600, April.
    10. Shlomie Hazam & Daniel Felsenstein, 2007. "Terror, Fear and Behaviour in the Jerusalem Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 44(13), pages 2529-2546, December.
    11. Argyroudis, George S. & Siokis, Fotios M., 2019. "Spillover effects of Great Recession on Hong-Kong’s Real Estate Market: An analysis based on Causality Plane and Tsallis Curves of Complexity–Entropy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 524(C), pages 576-586.
    Full references (including those not matched with items on IDEAS)

    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. Qian, Xianhang & Qiu, Shanyun & Zhang, Guangli, 2021. "The impact of COVID-19 on housing price: Evidence from China," Finance Research Letters, Elsevier, vol. 43(C).
    2. Elisa Guglielminetti & Michele Loberto & Giordano Zevi & Roberta Zizza, 2021. "Living on my own: the impact of the Covid-19 pandemic on housing preferences," Questioni di Economia e Finanza (Occasional Papers) 627, Bank of Italy, Economic Research and International Relations Area.
    3. Trojanek, Radoslaw & Gluszak, Michal, 2022. "Short-run impact of the Ukrainian refugee crisis on the housing market in Poland," Finance Research Letters, Elsevier, vol. 50(C).
    4. Yael Elster & Asaf Zussman & Noam Zussman, 2019. "Effective Counter‐Terrorism: Rockets, Iron Dome, and the Israeli Housing Market," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 38(2), pages 308-337, March.
    5. Elster, Yael & Zussman, Asaf & Zussman, Noam, 2017. "Rockets: The housing market effects of a credible terrorist threat," Journal of Urban Economics, Elsevier, vol. 99(C), pages 136-147.
    6. Nowak, Adam & Sayago-Gomez, Juan, 2018. "Homeowner preferences after September 11th, a microdata approach," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 330-351.
    7. Emmanuel Duguet & David Gray & Yannick L'Horty & Loïc du Parquet & Pascale Petit, 2020. "Labour market effects of urban riots: An experimental assessment," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 787-806, June.
    8. Noah Dormady & Thomas Szelazek & Adam Rose, 2014. "The Potential Impact of an Anthrax Attack on Real Estate Prices and Foreclosures in Seattle," Risk Analysis, John Wiley & Sons, vol. 34(1), pages 187-201, January.
    9. Nadav Ben Itzhak, 2018. "The Effect of Terrorism on Housing Rental Prices: Evidence from Jerusalem," Bank of Israel Working Papers 2018.08, Bank of Israel.
    10. Manelici, Isabela, 2017. "Terrorism and the value of proximity to public transportation: Evidence from the 2005 London bombings," Journal of Urban Economics, Elsevier, vol. 102(C), pages 52-75.
    11. Edward B. Barbier, 2016. "The Protective Value of Estuarine and Coastal Ecosystem Services in a Wealth Accounting Framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 37-58, May.
    12. Deng, Guoying & Gan, Li & Hernandez, Manuel A., 2015. "Do natural disasters cause an excessive fear of heights? Evidence from the Wenchuan earthquake," Journal of Urban Economics, Elsevier, vol. 90(C), pages 79-89.
    13. Guoying Deng & Li Gan & Manuel A. Hernandez, 2013. "Do People Overreact? Evidence from the Housing Market After the Wenchuan Earthquake," NBER Working Papers 19515, National Bureau of Economic Research, Inc.
    14. Donggyu Yi & Hyundo Choi, 2020. "Housing Market Response to New Flood Risk Information and the Impact on Poor Tenant," The Journal of Real Estate Finance and Economics, Springer, vol. 61(1), pages 55-79, June.
    15. Eddie C. M. Hui & Ka Kwan Kevin Chan, 2022. "How does Covid-19 affect global equity markets?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-19, December.
    16. Ferris, Jeffrey S. & Newburn, David A., 2017. "Wireless alerts for extreme weather and the impact on hazard mitigating behavior," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 239-255.
    17. Carolyn Kousky, 2010. "Learning from Extreme Events: Risk Perceptions after the Flood," Land Economics, University of Wisconsin Press, vol. 86(3).
    18. Nicholas Apergis, 2022. "Residential Housing Prices, COVID-19 and the Role of the Vaccination Program: Evidence from US State Panel Data," International Real Estate Review, Global Social Science Institute, vol. 25(4), pages 461-478.
    19. Marcos Sanso-Navarro & Fernando Sanz & María Vera-Cabello, 2015. "The impact of the American Civil War on city growth," Urban Studies, Urban Studies Journal Limited, vol. 52(16), pages 3070-3085, December.
    20. Matthew Gibson & Jamie T. Mullins & Alison Hill, 2019. "Climate Risk and Beliefs: Evidence from New York Floodplains," Department of Economics Working Papers 2019-02, Department of Economics, Williams College.

    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:gam:jscscx:v:9:y:2020:i:7:p:114-:d:380577. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.