Earthquakes and Price Discovery in the Housing Market: Evidence from New Zealand

INTERNATIONAL REAL ESTATE REVIEW, Volume: 19, Issue Number: 4, 2016

21 Pages Posted: 25 Oct 2017 Last revised: 26 Oct 2017

See all articles by Arsenio Staer

Arsenio Staer

California State University, Fullerton, Mihaylo College of Business & Economics, Department of Finance

Michael LaCour-Little

California State University - Fullerton - Department of Finance

Date Written: January 5, 2016

Abstract

This paper uses hedonic regression to examine prices in the Christchurch housing market before, and after, the recent severe earthquakes. Prices were relatively stable prior to the earthquakes but increased rapidly thereafter, consistent with the contraction of supply and increased demand from displaced households and a net influx of workers involved in the rebuilding effort. In addition, we find that the use of auctions increased after the earthquakes and that auctioned properties command significantly higher prices as compared to other sales methods, helping to explain the increased interest in this form of price discovery. Results are robust after correcting for potential sample selection bias.

Keywords: Housing Prices, Earthquakes, Auctions, Hedonic Regression

JEL Classification: R31

Suggested Citation

Staer, Arsenio and LaCour-Little, Michael, Earthquakes and Price Discovery in the Housing Market: Evidence from New Zealand (January 5, 2016). INTERNATIONAL REAL ESTATE REVIEW, Volume: 19, Issue Number: 4, 2016, Available at SSRN: https://ssrn.com/abstract=3058545

Arsenio Staer

California State University, Fullerton, Mihaylo College of Business & Economics, Department of Finance ( email )

PO Box 34080
Fullerton, CA 92834-9480
United States

Michael LaCour-Little (Contact Author)

California State University - Fullerton - Department of Finance ( email )

2600 E. Nutwood, 1060-26
Fullerton, CA 92834
United States
657-278-4014 (Phone)
657-278-2161 (Fax)

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