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Impact of the COVID-19 pandemic on the housing market at the epicenter of the outbreak in China

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  • Shian Zeng

    (Central University of Finance and Economics, Shahe University Park)

  • Chengdong Yi

    (Central University of Finance and Economics, Shahe University Park)

Abstract

The outbreak of the COVID-19 in January 2020 has had a profound impact on the global economy, so it is important to study the impact of the pandemic on the housing market. To investigate the impact of the pandemic on the housing market and the response of the housing market, this paper first uses the hedonic price model to compile the second-hand housing price index in Wuhan and its neighboring capital cities and then uses the difference-in-difference (DID) model to conduct a comprehensive study on new commercial housing and second-hand housing market. In addition, this paper also uses the VAR model to explore the housing market’s response to the epidemic situation. The results show that the negative impact of the pandemic on the housing market is mainly reflected in the volume and area of housing transactions, with little impact on housing prices. Second, the reported cases of COVID-19 have a negative impact on the housing market in the short term, which gradually weakens with time and disappears after three weeks. This paper’s findings indicate that the epidemic’s impact on the housing market is mainly due to the real estate enterprises stopping selling houses and local governments implementing home quarantine measures, which affect normal housing transactions. However, the COVID-19 pandemic did not greatly negatively impact consumers’ demand and confidence in buying houses, so the house prices remained stable overall.

Suggested Citation

  • 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.
    • Handle: RePEc:spr:snbeco:v:2:y:2022:i:6:d:10.1007_s43546-022-00225-2
    DOI: 10.1007/s43546-022-00225-2
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    References listed on IDEAS

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    1. Yaşar Reha Z. & Bulut Erdem, 2023. "Why Did Housing Prices Rise to a Record Level in Turkey? An Empirical Analysis," Real Estate Management and Valuation, Sciendo, vol. 31(4), pages 1-10, December.

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    More about this item

    Keywords

    COVID-19 pandemic; New commercial housing; Second-hand housing; Price index; VAR model;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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