The impact of COVID-19 on house prices in Northern Ireland: price persistence, yet divergent?

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Abstract

The recent onset of the COVID-19 pandemic has had a pervasive impact on all economies and indeed housing markets. This research investigates the regional impact of the pandemic on the Northern Ireland housing market and provides a unique opportunity to measure short-term reactions to epidemic shocks. Applying a unique dataset, the research measures whether price switching effects are evident as a consequence of the epidemic, and to what extent. In order to achieve this, the research applies spatial lag models to account for the effect of COVID-19 on housing market pricing behaviour. The findings show that the autocorrelation of house prices increased after COVID-19, revealing price persistence driven by behavioural changes. The results further show that a price divergent effect is observable, with the detached sector ‘leading’ the price changes. This price divergence is also apparent for rural dwellings and for neighbourhoods with higher socio-economic standing making them more resistant to the outbreak of COVID-19. This is an important finding as it reveals that epidemics of this nature impact upon housing markets in a heterogeneous way in the short-term, with a clear premium observed for larger housing in healthier and wealthier areas, which may serve to reinforce housing market inequalities.
Original languageEnglish
Pages (from-to)1-31
Number of pages31
JournalJournal of Property Research
Early online date5 Jan 2022
DOIs
Publication statusE-pub ahead of print - 5 Jan 2022

Keywords

  • COVID-19
  • behavioural effects
  • house prices
  • psychological impacts
  • spatial lag model

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