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

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 COVID19 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.

Automated summary

The impact of the COVID-19 epidemic on the real estate market in China is characterized by a decrease in housing prices in communities with infections, with homebuyers willing to pay a premium to avoid health risks. Market responses vary across different community and city characteristics. The effects of epidemic shocks on home prices, transaction volumes, and rents are short-lived and return to normal levels a few months after the outbreak. Public interventions such as community closures and quarantines may have contributed to the quick recovery of the housing market.