Article:
Earthquakes and Price Discovery in the Housing Market: Evidence from New Zealand
Author: Michael LaCour-Little, Arsenio Staer
Start Page: 493
End Page: 513
Volume: 19
Issue Number: 4
Year: 2016
Publication: International Real Estate Review
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
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