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Has SARS infected the property market? Evidence from Hong Kong()
This paper uses the 2003 Hong Kong Severe Acute Respiratory Syndrome (SARS) epidemic as a natural experiment to investigate how housing markets react to extreme events. A panel data set of large-scale housing complexes (estates) is used to exploit the cross-sectional variation in the spread of SARS...
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Elsevier Inc.
2008
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Acceso en línea: | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7133336/ https://www.ncbi.nlm.nih.gov/pubmed/32287489 http://dx.doi.org/10.1016/j.jue.2006.12.007 |
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author | Wong, Grace |
author_facet | Wong, Grace |
author_sort | Wong, Grace |
collection | PubMed |
description | This paper uses the 2003 Hong Kong Severe Acute Respiratory Syndrome (SARS) epidemic as a natural experiment to investigate how housing markets react to extreme events. A panel data set of large-scale housing complexes (estates) is used to exploit the cross-sectional variation in the spread of SARS to estimate the effect of the disease on real estate prices and sales. SARS risk is measured by: (1) the estate-level SARS infection rate, (2) news reports, and (3) government announcements of infections. The average price declines by 1–3 percent if an estate is directly affected by SARS, and by 1.6 percent for all estates as a result of the outbreak of the disease. A back-of-the-envelope calculation of the expected price fall under the rational asset-pricing model implies that the economic value of life consistent with the SARS-related price movement was less than $1 million. This low figure contrasts with the predictions of overreaction from psychological and behavioral economics theories. An analysis of transaction volume suggests that the absence of price overreaction is likely to be related to housing market characteristics, including transaction costs, credit constraints and loss aversion. |
format | Online Article Text |
id | pubmed-7133336 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2008 |
publisher | Elsevier Inc. |
record_format | MEDLINE/PubMed |
spelling | pubmed-71333362020-04-08 Has SARS infected the property market? Evidence from Hong Kong() Wong, Grace J Urban Econ Article This paper uses the 2003 Hong Kong Severe Acute Respiratory Syndrome (SARS) epidemic as a natural experiment to investigate how housing markets react to extreme events. A panel data set of large-scale housing complexes (estates) is used to exploit the cross-sectional variation in the spread of SARS to estimate the effect of the disease on real estate prices and sales. SARS risk is measured by: (1) the estate-level SARS infection rate, (2) news reports, and (3) government announcements of infections. The average price declines by 1–3 percent if an estate is directly affected by SARS, and by 1.6 percent for all estates as a result of the outbreak of the disease. A back-of-the-envelope calculation of the expected price fall under the rational asset-pricing model implies that the economic value of life consistent with the SARS-related price movement was less than $1 million. This low figure contrasts with the predictions of overreaction from psychological and behavioral economics theories. An analysis of transaction volume suggests that the absence of price overreaction is likely to be related to housing market characteristics, including transaction costs, credit constraints and loss aversion. Elsevier Inc. 2008-01 2007-02-01 /pmc/articles/PMC7133336/ /pubmed/32287489 http://dx.doi.org/10.1016/j.jue.2006.12.007 Text en Copyright © 2007 Elsevier Inc. All rights reserved. Since January 2020 Elsevier has created a COVID-19 resource centre with free information in English and Mandarin on the novel coronavirus COVID-19. The COVID-19 resource centre is hosted on Elsevier Connect, the company's public news and information website. Elsevier hereby grants permission to make all its COVID-19-related research that is available on the COVID-19 resource centre - including this research content - immediately available in PubMed Central and other publicly funded repositories, such as the WHO COVID database with rights for unrestricted research re-use and analyses in any form or by any means with acknowledgement of the original source. These permissions are granted for free by Elsevier for as long as the COVID-19 resource centre remains active. |
spellingShingle | Article Wong, Grace Has SARS infected the property market? Evidence from Hong Kong() |
title | Has SARS infected the property market? Evidence from Hong Kong() |
title_full | Has SARS infected the property market? Evidence from Hong Kong() |
title_fullStr | Has SARS infected the property market? Evidence from Hong Kong() |
title_full_unstemmed | Has SARS infected the property market? Evidence from Hong Kong() |
title_short | Has SARS infected the property market? Evidence from Hong Kong() |
title_sort | has sars infected the property market? evidence from hong kong() |
topic | Article |
url | https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7133336/ https://www.ncbi.nlm.nih.gov/pubmed/32287489 http://dx.doi.org/10.1016/j.jue.2006.12.007 |
work_keys_str_mv | AT wonggrace hassarsinfectedthepropertymarketevidencefromhongkong |