Examine COVID-19’s effect on housing prices from two factors: epidemiological severity and policy interventions.
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Document a negative relationship between prior COVID-19 cases and daily housing returns in Australia housing market.
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Daily housing return drop by 0.35 basis points in daily terms or 1.26 percentage points annually for every doubling of the number of newly confirmed COVID-19 cases in a state.
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Government lockdown orders do not have a significant effect on housing returns.
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Robust to alternative proxies of COVID-19 prevalence and model specifications.
Abstract
Using daily hedonic housing price index for five Australian capital cities, we document a negative relationship between prior COVID-19 cases and daily housing returns. Specifically, the daily housing return drops by 0.35 basis points or 1.26 percentage points annually for every doubling of newly confirmed COVID-19 cases in a state. We also examine the effect of government lockdown orders on housing returns and find insignificant results. These findings are robust under alternative pandemic proxies such as total active COVID-19 cases and other model specifications. Overall, our paper contributes to the literature on the geographic spread of pandemics and real estate prices.
