Impact of major events on housing prices in Hangzhou based on regression discontinuity
Abstract
Based on the regression discontinuity method, housing transaction price data of Hangzhou at the community level were used to assess the impacts of a serious of major events on housing prices in Hangzhou. The results show that the 2008 financial crisis had the strongest negative impact on housing prices, with prices decreasing by about 20%. Winning the right to host the G20 summit did not significantly impact housing prices, while holding the summit caused an increase in prices (about 10%). The first implementation of the home purchase restriction (HPR) caused a decreasing discontinuity of housing prices. Cancellation of the HPR did not cause a discontinuity effect, but the trend changed from negative to positive, and resumption of the HPR for local residents yielded the largest drop in housing prices, resulting in a 10% downward cut-point. However, the impact time was relatively short and did not change the rapid rising trend of housing prices.
Keyword : major events, housing prices, regression discontinuity, financial crisis, Hangzhou G20 summit, home purchase restriction policy
How to Cite
Zhang, L., Zhu, L., & Yang, L. (2022). Impact of major events on housing prices in Hangzhou based on regression discontinuity. International Journal of Strategic Property Management, 26(3), 203-214. https://doi.org/10.3846/ijspm.2022.16970
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Francke, M., & Korevaar, M. (2021). Housing markets in a pandemic: evidence from historical outbreaks. Journal of Urban Economics, 123, 103333. https://doi.org/10.1016/j.jue.2021.103333
Gaffney, C. (2016). Gentrifications in pre-Olympic Rio de Janeiro. Urban Geography, 37(8), 1132–1153. https://doi.org/10.1080/02723638.2015.1096115
Gibbons, S., Machin, S., & Silva, O. (2013). Valuing school quality using boundary discontinuities. Journal of Urban Economics, 75, 15–28. https://doi.org/10.1016/j.jue.2012.11.001
Gupta, R., Jurgilas, M., & Kabundi, A. (2010). The effect of monetary policy on real house price growth in South Africa: a factor-augmented vector autoregression (FAVAR) approach. Economic Modelling, 27(1), 315–323. https://doi.org/10.1016/j.econmod.2009.09.011
Gyourko, J., & Molloy, R. (2015). Regulation and housing supply. In Handbook of regional and urban economics (pp. 1289–1337). Elsevier. https://doi.org/10.1016/B978-0-444-59531-7.00019-3
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Hilber, C. A. L., & Vermeulen, W. (2016). The impact of supply constraints on house prices in England. The Economic Journal, 126(591), 358–405. https://doi.org/10.1111/ecoj.12213
Hiller, H. H. (1998). Assessing the impact of mega-events: a linkage model. Current Issues in Tourism, 1(1), 47–57. https://doi.org/10.1080/13683509808667832
Hoesli, M., Milcheva, S., & Moss, A. (2017). Is financial regulation good or bad for real estate companies? – An event study. The Journal of Real Estate Finance and Economics, 61(3), 369–407. https://doi.org/10.1007/s11146-017-9634-z
Huang, F. X., & Gu, J. (2011). The correlation aggregation effect of the financial crisis on house prices in 70 cities in China. Management Review, 23(06), 3–8. https://doi.org/10.14120/j.cnki.cn11-5057/f.2011.06.007
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Imbens, G. W., & Lemieux, T. (2008). Regression discontinuity designs: a guide to practice. Journal of Econometrics, 142(2), 615–635. https://doi.org/10.1016/j.jeconom.2007.05.001
Karamon, K., McManus, D., & Zhu, J. (2017). Refinance and mortgage default: a regression discontinuity analysis of HARP’s impact on default rates. The Journal of Real Estate Finance and Economics, 55(4), 457–475. https://doi.org/10.1007/s11146-016-9566-z
Katrakilidis, C., & Trachanas, E. (2012). What drives housing price dynamics in Greece: new evidence from asymmetric ARDL cointegration. Economic Modelling, 29(4), 1064–1069. https://doi.org/10.1016/j.econmod.2012.03.029
Kavetsos, G. (2012). The impact of the London Olympics announcement on property prices. Urban Studies, 49(7), 1453–1470. https://doi.org/10.1177/0042098011415436
Kontokosta, C. (2012). The price of victory: the impact of the olympic games on residential real estate markets. Urban Studies, 49(5), 961–978. https://doi.org/10.1177/0042098011411952
Lamberti, L., Noci, G., Guo, J., & Zhu, S. (2011). Mega-events as drivers of community participation in developing countries: the case of Shanghai World Expo. Tourism Management, 32(6), 1474–1483. https://doi.org/10.1016/j.tourman.2010.12.008
Lee, D. S., & Lemieux, T. (2010). Regression discontinuity designs in economics. Journal of Economic Literature, 48(2), 281–355. https://doi.org/10.1257/jel.48.2.281
Liao, Q. Y., Yu, J. P., & Ding, Y. F. (2018). Research on evaluating the effectiveness of real estate purchase restriction policy – based on regression discontinuity analysis. Construction Economics, 39(09), 86–91.
Martínez, L. M., & Viegas, J. M. (2009). Effects of transportation accessibility on residential property values: hedonic price model in the Lisbon, Portugal, metropolitan area. Transportation Research Record, 2115(1), 127–137. https://doi.org/10.3141/2115-16
Mulley, C., & Tsai, C.-H. (2016). When and how much does new transport infrastructure add to property values? Evidence from the bus rapid transit system in Sydney, Australia. Transport Policy, 51, 15–23. https://doi.org/10.1016/j.tranpol.2016.01.011
Nanda, A., & Ross, S. L. (2009). The impact of property condition disclosure laws on housing prices: evidence from an event study using propensity scores. The Journal of Real Estate Finance and Economics, 45(1), 88–109. https://doi.org/10.1007/s11146-009-9206-y
Qiao, K. Y. (2012). Are the home purchase restrictions really working? Evidence from 70 large and medium-sized cities in China. Economics and Management Research, (12), 25–34. https://doi.org/10.13502/j.cnki.issn1000-7636.2012.12.004
Reinhart, C. M., & Rogoff, K. S. (2009). The aftermath of financial crises. The American Economic Review, 99(2), 466–472. https://doi.org/10.1257/aer.99.2.466
Ritchie, J. B., & Yangzhou, J. (1987). The role and impact of mega-events and attractions on national and regional tourism: a conceptual and methodological overview. Proceedings of the 37th Congress of AIEST, 28, 17–57.
Ruan, L. F., Bao, H. J., & Wen, H. J. (2012). The impact of major events on urban residential prices – Evidence from Hangzhou City. China Land Science, 26(12), 41–47. https://doi.org/10.13708/j.cnki.cn11-2640.2012.12.009
Sun, W., Zheng, S., Geltner, D. M., & Wang, R. (2017). The housing market effects of local home purchase restrictions: evidence from Beijing. The Journal of Real Estate Finance and Economics, 55(3), 288–312. https://doi.org/10.1007/s11146-016-9586-8
Thistlethwaite, D. L., & Campbell, D. T. (1960). Regression-discontinuity analysis: an alternative to the ex post facto experiment. Journal of Educational Psychology, 51(6), 309–317. https://doi.org/10.1037/h0044319
Trojanek, R. (2021). Housing price cycles in Poland – the case of 18 provincial capital cities in 2000–2020. International Journal of Strategic Property Management, 25(4), 332–345. https://doi.org/10.3846/ijspm.2021.14920
Wang, H., Pan, A. M., & Chen, X. Z. (2014). Economic environment, regulatory policies and regional housing prices: from the perspective of strong correlation between panel data. Southern Economics, (06), 56–74. https://doi.org/10.3969/j.issn.1000-6249.2014.06.004
Wang, M., & Huang, Y. (2013). The impact of purchase restriction and property tax on house prices: an analysis based on long-term dynamic equilibrium. World Economy, 36(01), 141–159.
Webb, R. I., Yang, J., & Zhang, J. (2016). Price jump risk in the US housing market. The Journal of Real Estate Finance and Economics, 53(1), 29–49. https://doi.org/10.1007/s11146-015-9518-z
Wu, B. (2019). Effectiveness of the impact of purchase restriction policy on urban residential prices based on breakpoint regression analysis. Urban Housing, 26(04), 93–96. https://doi.org/10.3969/j.issn.1006-6659.2019.04.024
Yamawaki, Y., Castro Filho, F. M. d., & Costa, G. E. G. d. (2020). Mega-event transport legacy in a developing country: the case of Rio 2016 Olympic Games and its Transolímpica BRT corridor. Journal of Transport Geography, 88, 102858. https://doi.org/10.1016/j.jtrangeo.2020.102858
Yu, H. Y. (2010). Economic fundamentals or real estate policies influence house prices in China. Finance and Trade Economics, (03), 116–122. https://doi.org/10.19795/j.cnki.cn11-1166/f.2010.03.019
Zhang, J. T., Fang, C. C., & He, F. (2015). Evaluation of real estate purchase and loan restriction policies in Shanghai: a study based on breakpoint regression design. Scientific Decision Making, (07), 1–23. https://doi.org/10.3773/j.issn.1006-4885.2015.07.001
Zhang, L., Chang, X., & Wen, H. Z. (2017). The impact of major events and policy adjustments on prices and volume fluctuations in the housing market of Hangzhou. Journal of Zhejiang University (Science Edition), 44(03), 363–368, 378. https://doi.org/10.3785/j.issn.1008-9497.2017.03.018
Bork, L., & Møller, S. V. (2018). Housing price forecastability: a factor analysis. Real Estate Economics, 46(3), 582–611. https://doi.org/10.1111/1540-6229.12185
Burbank, M. J., Andranovich, G., & Heying, C. H. (2002). Mega-events, urban development, and public policy. The Review of Policy Research, 19(3), 179–202. https://doi.org/10.1111/j.1541-1338.2002.tb00301.x
Chen, Q. (2014). Advanced econometrics and Stata applications (2nd ed.). Higher Education Press.
Dell, M., Lane, N., & Querubin, P. (2018). The historical state, local collective action, and economic development in Vietnam. Econometrica, 86(6), 2083–2121. https://doi.org/10.3982/ECTA15122
Francke, M., & Korevaar, M. (2021). Housing markets in a pandemic: evidence from historical outbreaks. Journal of Urban Economics, 123, 103333. https://doi.org/10.1016/j.jue.2021.103333
Gaffney, C. (2016). Gentrifications in pre-Olympic Rio de Janeiro. Urban Geography, 37(8), 1132–1153. https://doi.org/10.1080/02723638.2015.1096115
Gibbons, S., Machin, S., & Silva, O. (2013). Valuing school quality using boundary discontinuities. Journal of Urban Economics, 75, 15–28. https://doi.org/10.1016/j.jue.2012.11.001
Gupta, R., Jurgilas, M., & Kabundi, A. (2010). The effect of monetary policy on real house price growth in South Africa: a factor-augmented vector autoregression (FAVAR) approach. Economic Modelling, 27(1), 315–323. https://doi.org/10.1016/j.econmod.2009.09.011
Gyourko, J., & Molloy, R. (2015). Regulation and housing supply. In Handbook of regional and urban economics (pp. 1289–1337). Elsevier. https://doi.org/10.1016/B978-0-444-59531-7.00019-3
Hahn, J., Todd, P., & Van der Klaauw, W. (2001). Identification and estimation of treatment effects with a regression-discontinuity design. Econometrica, 69(1), 201–209. https://doi.org/10.1111/1468-0262.00183
Han, Y. H., Huang, L. X., & Zou J. H. (2014). Research on the effect of home purchase restriction policy. Economic Management, 36(04), 159–169. https://doi.org/10.19616/j.cnki.bmj.2014.04.018
Heyden, K. J., & Heyden, T. (2021). Market reactions to the arrival and containment of COVID-19: an event study. Finance Research Letters, 38, 101745–101745. https://doi.org/10.1016/j.frl.2020.101745
Hilber, C. A. L., & Vermeulen, W. (2016). The impact of supply constraints on house prices in England. The Economic Journal, 126(591), 358–405. https://doi.org/10.1111/ecoj.12213
Hiller, H. H. (1998). Assessing the impact of mega-events: a linkage model. Current Issues in Tourism, 1(1), 47–57. https://doi.org/10.1080/13683509808667832
Hoesli, M., Milcheva, S., & Moss, A. (2017). Is financial regulation good or bad for real estate companies? – An event study. The Journal of Real Estate Finance and Economics, 61(3), 369–407. https://doi.org/10.1007/s11146-017-9634-z
Huang, F. X., & Gu, J. (2011). The correlation aggregation effect of the financial crisis on house prices in 70 cities in China. Management Review, 23(06), 3–8. https://doi.org/10.14120/j.cnki.cn11-5057/f.2011.06.007
Huang, Z. H., Xu, W. L., & Du, X. J. (2019). Spatial and temporal effects of urban renewal on real estate market: an empirical study based on Hangzhou City. Geoscience, 39(11), 1757–1762. https://doi.org/10.13249/j.cnki.sgs.2019.11.009
Imbens, G. W., & Lemieux, T. (2008). Regression discontinuity designs: a guide to practice. Journal of Econometrics, 142(2), 615–635. https://doi.org/10.1016/j.jeconom.2007.05.001
Karamon, K., McManus, D., & Zhu, J. (2017). Refinance and mortgage default: a regression discontinuity analysis of HARP’s impact on default rates. The Journal of Real Estate Finance and Economics, 55(4), 457–475. https://doi.org/10.1007/s11146-016-9566-z
Katrakilidis, C., & Trachanas, E. (2012). What drives housing price dynamics in Greece: new evidence from asymmetric ARDL cointegration. Economic Modelling, 29(4), 1064–1069. https://doi.org/10.1016/j.econmod.2012.03.029
Kavetsos, G. (2012). The impact of the London Olympics announcement on property prices. Urban Studies, 49(7), 1453–1470. https://doi.org/10.1177/0042098011415436
Kontokosta, C. (2012). The price of victory: the impact of the olympic games on residential real estate markets. Urban Studies, 49(5), 961–978. https://doi.org/10.1177/0042098011411952
Lamberti, L., Noci, G., Guo, J., & Zhu, S. (2011). Mega-events as drivers of community participation in developing countries: the case of Shanghai World Expo. Tourism Management, 32(6), 1474–1483. https://doi.org/10.1016/j.tourman.2010.12.008
Lee, D. S., & Lemieux, T. (2010). Regression discontinuity designs in economics. Journal of Economic Literature, 48(2), 281–355. https://doi.org/10.1257/jel.48.2.281
Liao, Q. Y., Yu, J. P., & Ding, Y. F. (2018). Research on evaluating the effectiveness of real estate purchase restriction policy – based on regression discontinuity analysis. Construction Economics, 39(09), 86–91.
Martínez, L. M., & Viegas, J. M. (2009). Effects of transportation accessibility on residential property values: hedonic price model in the Lisbon, Portugal, metropolitan area. Transportation Research Record, 2115(1), 127–137. https://doi.org/10.3141/2115-16
Mulley, C., & Tsai, C.-H. (2016). When and how much does new transport infrastructure add to property values? Evidence from the bus rapid transit system in Sydney, Australia. Transport Policy, 51, 15–23. https://doi.org/10.1016/j.tranpol.2016.01.011
Nanda, A., & Ross, S. L. (2009). The impact of property condition disclosure laws on housing prices: evidence from an event study using propensity scores. The Journal of Real Estate Finance and Economics, 45(1), 88–109. https://doi.org/10.1007/s11146-009-9206-y
Qiao, K. Y. (2012). Are the home purchase restrictions really working? Evidence from 70 large and medium-sized cities in China. Economics and Management Research, (12), 25–34. https://doi.org/10.13502/j.cnki.issn1000-7636.2012.12.004
Reinhart, C. M., & Rogoff, K. S. (2009). The aftermath of financial crises. The American Economic Review, 99(2), 466–472. https://doi.org/10.1257/aer.99.2.466
Ritchie, J. B., & Yangzhou, J. (1987). The role and impact of mega-events and attractions on national and regional tourism: a conceptual and methodological overview. Proceedings of the 37th Congress of AIEST, 28, 17–57.
Ruan, L. F., Bao, H. J., & Wen, H. J. (2012). The impact of major events on urban residential prices – Evidence from Hangzhou City. China Land Science, 26(12), 41–47. https://doi.org/10.13708/j.cnki.cn11-2640.2012.12.009
Sun, W., Zheng, S., Geltner, D. M., & Wang, R. (2017). The housing market effects of local home purchase restrictions: evidence from Beijing. The Journal of Real Estate Finance and Economics, 55(3), 288–312. https://doi.org/10.1007/s11146-016-9586-8
Thistlethwaite, D. L., & Campbell, D. T. (1960). Regression-discontinuity analysis: an alternative to the ex post facto experiment. Journal of Educational Psychology, 51(6), 309–317. https://doi.org/10.1037/h0044319
Trojanek, R. (2021). Housing price cycles in Poland – the case of 18 provincial capital cities in 2000–2020. International Journal of Strategic Property Management, 25(4), 332–345. https://doi.org/10.3846/ijspm.2021.14920
Wang, H., Pan, A. M., & Chen, X. Z. (2014). Economic environment, regulatory policies and regional housing prices: from the perspective of strong correlation between panel data. Southern Economics, (06), 56–74. https://doi.org/10.3969/j.issn.1000-6249.2014.06.004
Wang, M., & Huang, Y. (2013). The impact of purchase restriction and property tax on house prices: an analysis based on long-term dynamic equilibrium. World Economy, 36(01), 141–159.
Webb, R. I., Yang, J., & Zhang, J. (2016). Price jump risk in the US housing market. The Journal of Real Estate Finance and Economics, 53(1), 29–49. https://doi.org/10.1007/s11146-015-9518-z
Wu, B. (2019). Effectiveness of the impact of purchase restriction policy on urban residential prices based on breakpoint regression analysis. Urban Housing, 26(04), 93–96. https://doi.org/10.3969/j.issn.1006-6659.2019.04.024
Yamawaki, Y., Castro Filho, F. M. d., & Costa, G. E. G. d. (2020). Mega-event transport legacy in a developing country: the case of Rio 2016 Olympic Games and its Transolímpica BRT corridor. Journal of Transport Geography, 88, 102858. https://doi.org/10.1016/j.jtrangeo.2020.102858
Yu, H. Y. (2010). Economic fundamentals or real estate policies influence house prices in China. Finance and Trade Economics, (03), 116–122. https://doi.org/10.19795/j.cnki.cn11-1166/f.2010.03.019
Zhang, J. T., Fang, C. C., & He, F. (2015). Evaluation of real estate purchase and loan restriction policies in Shanghai: a study based on breakpoint regression design. Scientific Decision Making, (07), 1–23. https://doi.org/10.3773/j.issn.1006-4885.2015.07.001
Zhang, L., Chang, X., & Wen, H. Z. (2017). The impact of major events and policy adjustments on prices and volume fluctuations in the housing market of Hangzhou. Journal of Zhejiang University (Science Edition), 44(03), 363–368, 378. https://doi.org/10.3785/j.issn.1008-9497.2017.03.018