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

Michael LaCour-Little () and Arsenio Staer ()
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Michael LaCour-Little: California State University - Fullerton
Arsenio Staer: California State University - Fullerton

International Real Estate Review, 2016, vol. 19, issue 4, 493-513

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 (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2016
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