Changes in risk appreciation, and short memory of house buyers when the market is hot, a case study of Christchurch, New Zealand

Emil Mendoza, Fabian Dunker and Marco Reale

Journal of Property Research, 2024, vol. 41, issue 4, 324-343

Abstract: In this paper, house prices in Christchurch are analysed over three distinct periods of time: post-2011 earthquake, pre-COVID-19 lockdown, and post-COVID-19 lockdown. The first method used is the well-established hedonic price model, additionally a second method incorporates random effects into the model to capture unobserved heterogeneity in buyers’ preferences for certain features of a house. Results show that buyers, in periods that are temporally distant from the 2011 Christchurch earthquake, underappreciate the risk of potential earthquake damage to a property. We find that there are observable shifts in buyer preference across the different time periods, specifically in terms of section size. We also examine heterogeneity and correlations in buyers’ preferences for floor area, land area, and age of a property.

Date: 2024
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DOI: 10.1080/09599916.2024.2339813

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