Spillovers in Asset Prices: The Curious Case of Haunted Houses
54 Pages Posted: 30 Nov 2017 Last revised: 22 Nov 2019
Date Written: November 21, 2019
Exploiting the unique institutional setting of Hong Kong’s real estate market, we uncover a curious ripple effect of haunted houses on the prices of nearby houses. Prices drop on average 19% for units that become haunted, 9% for units on the same floor, 6% for units in the same block, and 1% for units in the same estate. Our study makes two contributions. First, we provide an estimate of a large negative spillover on prices caused by an idiosyncratic quality shock. Second, we find that the demand shock rather than the fire sale supply shock explains most of the spillover.
Keywords: fire sales, negative spillovers, haunted houses
JEL Classification: D62, H23, R21, R31
Suggested Citation: Suggested Citation