Mastering the metropolis through research and thought leadership.
Working Papers

Has Sars Infected the Property Market?

Working paper #501
Maisy Wong

This paper uses the Hong Kong Severe Acute Respiratory Syndrome (Sars) epidemic in 2003 as a natural experiment to investigate how housing markets react to extreme events. I use a panel data set of large-scale housing complexes (called estates) and exploit the cross-sectional variation in the spread of Sars to measure the housing price movements associated with the epidemic. I contrast the impact on prices and sales of government announcements of SARS infections, news reports and the estimated estate-level infection rate. The average impact is 1-3 percent drop in price for the average Sars-affected housing complex, and an overall price fall of 1.6 percent for all estates. The implied economic value of life is between USD 121,000 and 1 million, which falls towards the lower end of estimates from non-extreme events. No evidence of overreaction in prices is found. An analysis on changes in transaction volume suggests that the absence of overreaction in housing prices is probably a result of high transaction costs and loss aversion.

Download full paper · 1MB PDF

In This Section
Explore Topics

1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles bonds Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets cold storage Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics data centers Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics education election studies Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global global economy Global Financial Crisis Globalization great depression Great Recession healthy buildings Hedonic hospitality Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India inflation Inter-generational mobility interest rates Investing jobs labor market Lagging Regions land use regulation Language life sciences Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector pension funds Placed Based Policies Political Risk Price Discovery Private Equity Business public health public policy Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk management risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect stimulus package Sub-Prime Mortgages Supply Chains Sustainability Technology telecommunications trade transportation unemployment United States Urban Urbanization Warehouse welfare work from home