The effect of COVID-19 pandemic on residential real estate prices: Turkish case

Selahattin Kaynak; Aykut Ekinci; Havvanur Feyza Kaya; Selahattin Kaynak; Aykut Ekinci; Havvanur Feyza Kaya

doi:10.3934/QFE.2021028

Quantitative Finance and Economics

2021, Volume 5, Issue 4: 623-639. doi: 10.3934/QFE.2021028

Previous Article Next Article

Research article Special Issues

The effect of COVID-19 pandemic on residential real estate prices: Turkish case

1.
Department of International Business and Commerce, Samsun University, Samsun, Turkey
2.
Department of Economics and Finance, Samsun University, Samsun, Turkey
¹ This research article is derived from the project "COVID-19 Pandemic on the Residential and Commercial Real Estate Prices: The Case of Turkey" funded by The Scientific and Technological Research Council of Turkey

Received: 24 August 2021 Accepted: 07 October 2021 Published: 12 October 2021
JEL Codes: C33, I18, G14, R31

This study investigates the effect of the COVID-19 pandemic on the residential real estate prices in Turkey. This study indicates the effect of COVID-19, loan package, macroeconomic and behavioral control variables on abnormal returns of residential real estate prices during the event window. This study consists of three econometric steps. Firstly, the abnormal returns of the residential real estate prices are obtained by using an event study. Secondly, the effect of the COVID-19 pandemic on abnormal returns of residential real estate prices was estimated by panel data analysis for regional and city levels. According to the findings of the city level, the COVID-19 pandemic has a negative effect on abnormal returns of residential prices, as expected. However, the regional analysis shows mainly a positive COVID-19 effect.
- the residential real estate prices,
- event study,
- panel data,
- COVID-19
Citation: Selahattin Kaynak, Aykut Ekinci, Havvanur Feyza Kaya. The effect of COVID-19 pandemic on residential real estate prices: Turkish case[J]. Quantitative Finance and Economics, 2021, 5(4): 623-639. doi: 10.3934/QFE.2021028

Related Papers:

Abstract

This study investigates the effect of the COVID-19 pandemic on the residential real estate prices in Turkey. This study indicates the effect of COVID-19, loan package, macroeconomic and behavioral control variables on abnormal returns of residential real estate prices during the event window. This study consists of three econometric steps. Firstly, the abnormal returns of the residential real estate prices are obtained by using an event study. Secondly, the effect of the COVID-19 pandemic on abnormal returns of residential real estate prices was estimated by panel data analysis for regional and city levels. According to the findings of the city level, the COVID-19 pandemic has a negative effect on abnormal returns of residential prices, as expected. However, the regional analysis shows mainly a positive COVID-19 effect.

References

[1]	Abdulai RT, Owusu-Ansah A (2011) House price determinants in Liverpool, United Kingdom. Current Politics and Economics of Europe, Nova Science Publishers, Inc., 22: 1–26.
[2]	Afşar A, Yilmazel Ö, Yilmazel S (2017) Konut fiyatlarini etkileyen faktörlerin hedonik model ile belirlenmesi: Eskişehir Örneği. Selçuk Ün Sos Bil Ens Der, 195–205.
[3]	Anaman KA, Osei-Amponsah C (2007) Analysis of the causality links between the growth of the construction industry and the growth of the macro-economy in Ghana. Constr Manage Econ 25: 951–961. doi: 10.1080/01446190701411208
[4]	Apergis N (2020) Natural disasters and housing prices: fresh evidence from a global country sample. Int Real Estate Rev 23: 815–836.
[5]	Bahmani-Oskooee M, Ghodsi SH. (2018) Asymmetric causality between the US housing market and its stock market: Evidence from state level data. J Econ Asymmetr 18: e00095.
[6]	Bahmani-Oskooee M, Ghods SH (2019) On the Link between Value of the Dollar and Housing Production in the U.S.: Evidence from State Level Data. Int Real Estate Rev 22: 231–274.
[7]	Beaver WH (1968) The information content of annual earnings announcements. J Account Res 6: 67–92. doi: 10.2307/2490070
[8]	Brau J, Holmes A (2006) Why do REITs repurchase stock? Extricating the effect of managerial signaling in open market share repurchase announcements. J Real Estate Res 28: 1–24. doi: 10.1080/10835547.2006.12091169
[9]	Brown SJ, Warner JB (1980) Measuring security price performance. J Financ Econ 8: 205–258. doi: 10.1016/0304-405X(80)90002-1
[10]	Brown SJ, Warner JB (1985) Using daily stock returns: The case of event studies. J Financ Econ 14: 3–31. doi: 10.1016/0304-405X(85)90042-X
[11]	Chen H, Michaux M, Roussanov N (2020) Houses as ATMs: mortgage refinancing and macroeconomic uncertainty. J Financ 75: 323–375. doi: 10.1111/jofi.12842
[12]	Chen MH, Jang SS, Kim WG (2007) The impact of the SARS outbreak on Taiwanese hotel stock performance: an event-study approach. Int J Hosp Manag 26: 200–212. doi: 10.1016/j.ijhm.2005.11.004
[13]	Cloyne J, Huber K, Ilzetzki E, et al. (2019) The effect of house prices on household borrowing: a new approach. Am Econ Rev 109: 2104–2136. doi: 10.1257/aer.20180086
[14]	Contat JC, Turnbull GK, Waller BD (2019) Politics and Prices: Presidential Elections and the Housing Market.
[15]	Dyckman T, Philbrick D, Stephan J (1984) A comparison of event study methodologies using daily stock returns: A simulation approach. J Account Res 22: 1–30. doi: 10.2307/2490855
[16]	Erol I, Umut U (2015) Role of construction sector in economic growth: new evidence in Turkey. MPRA Paper, 1–31.
[17]	Fama E (1991) Efficient capital markets: Ⅱ. J Financ 46: 1575–1617. doi: 10.1111/j.1540-6261.1991.tb04636.x
[18]	Rasmus F, Michael MH (2003) Is sterilised foreign exchange intervention effective after all? An event study approach. Econ J 113: 390–411. doi: 10.1111/1468-0297.00122
[19]	Fehrle D (2019) Housing and the business cycle revisited. J Econ Dyn Control 99: 103–115. doi: 10.1016/j.jedc.2018.12.004
[20]	Fuerst F (2005) Exogenous shocks and real estate rental markets: An event study of the 9/11 attacks and their impact on the New York office market. Available from: https://ssrn.com/abstract=800006 or http://dx.doi.org/10.2139/ssrn.800006.
[21]	Giang DT, Pheng LS (2011) Role of construction in economic development: Review of key concepts in the past 40 years. Habitat Int 35: 118–125. doi: 10.1016/j.habitatint.2010.06.003
[22]	Glewwe P (1991) Investigating the determinants of household welfare in Côte d'Ivoire. J Dev Econ 35: 307–337. doi: 10.1016/0304-3878(91)90053-X
[23]	Greene WH (1993) Econometric analysis. 2^nd Edition, New Jersey: Prentice Hall.
[24]	Greene WH (2000). Econometric analysis. Upper Saddle River, New Jersey: Prentice-Hall.
[25]	Greene WH (2001) Fixed and Random Effect in Nonlinear Models. Available from: http://www.stren.nyu.edu/eco/wkpapers/workingpapers01/EC-01-01.pdf.
[26]	Gül ZB (2017) Construction industry in Turkey: an input-output analysis using the world input-output database (wiod) for the 2002–2011 periods. Atatürk Üniversitesi İktisadi ve İdari Bilimler Dergisi 31.
[27]	Gupta A, Mittal V, Peeters J, et al. (2021) Flattening the curve: pandemic-induced revaluation of urban real estate. NBER Working Papers.
[28]	He P, Sun Y, Zhang Y, et al. (2020) COVID-19's impact on stock prices across different sectors—An event study based on the Chinese stock market. Emerg Mark Financ Trade 56: 2198–2212. doi: 10.1080/1540496X.2020.1785865
[29]	Hoesli M, Milcheva S, Moss A (2020) Is Financial Regulation Good or Bad for Real Estate Companies? —An Event Study. J Real Estate Finan Econ 61: 369–407. doi: 10.1007/s11146-017-9634-z
[30]	Hu MR, Lee AD, Zou D (2021) COVID-19 and Housing Prices: Australian Evidence with Daily Hedonic Returns. Available from: https://ssrn.com/abstract=3768953 or http://dx.doi.org/10.2139/ssrn.3768953.
[31]	Ilhan B, Yaman H (2011) A comparative input-output analysis of the construction sector in Turkey and EU countries. Eng Constr Archit Manag 18: 248–265. doi: 10.1108/09699981111126160
[32]	Jung H, Lee J (2017) The effects of macroprudential policies on house prices: Evidence from an event study using Korean real transaction data. J Financ Stab 31: 167–185. doi: 10.1016/j.jfs.2017.07.001
[33]	Warner JB, Kothari SP (2006) Econometrics of event studies. Handb Empir Corp Financ 1: 3–36.
[34]	Kofoworola OF, Gheewala S (2008) An input–output analysis of Thailand's construction sector. Constr Manag Econ 26: 1227–1240. doi: 10.1080/01446190802425560
[35]	Lean CS (2001) Empirical tests to discern linkages between construction and other economic sectors in Singapore. Constr Manag Econ 19: 355–363. doi: 10.1080/01446190010022686
[36]	Lewis TM (2009) Quantifying the GDP–construction relationship. Econ Mod Built Environ, 34–59.
[37]	Liargovas P, Repousis S (2011) The impact of mergers and acquisitions on the performance of the Greek banking sector: An event study approach. Int J Econ Financ 3: 89–100. doi: 10.5539/ijef.v3n2p89
[38]	Ling DC, Wang C, Zhou T (2020) A first look at the impact of COVID-19 on commercial real estate prices: Asset-level evidence. Rev Asset Pricing Stud 10: 669–704. doi: 10.1093/rapstu/raaa014
[39]	Liow KH, Song J (2019) Market Integration Among the US and Asian Real Estate Investment Trusts in Crisis Times. Int Real Estate Rev 22: 463–512. doi: 10.53383/100288
[40]	Liu S, Su Y (2021) The impact of the Covid-19 pandemic on the demand for density: Evidence from the US housing market. Econ Lett 207: 110010.
[41]	Lopes J (2009) Investment in construction and economic growth: a long-term perspective. Econ Mod Buill Environ, 94–112.
[42]	Lopes J (2012) Construction in the economy and its role in socio-economic development: role of construction in economic development. New perspectives on construction in develops countries, 1st Edition, Routledge, 41–71.
[43]	Miyajima H, Yafeh Y (2007) Japan's banking crisis: An event-study perspective. J Bank Financ 31: 2866–2885. doi: 10.1016/j.jbankfin.2007.03.006
[44]	Nanda A, Ross SL (2012) The impact of property condition disclosure laws on housing prices: Evidence from an event study using propensity scores. J Real Estate Financ Econ 45: 88–109. doi: 10.1007/s11146-009-9206-y
[45]	Ozkan F, Ozkan O, Gunduz M (2012) Causal relationship between construction investment policy and economic growth in Turkey. Technol Forecast Soc Change 79: 362–370. doi: 10.1016/j.techfore.2011.04.007
[46]	Ozturk N, Fitoz E (2009) Türkiye'de Konut Piyasasinin Belirleyicileri: Ampirik Bir Uygulama. Uluslararası Yönetim İktisat ve İşletme Dergisi 5: 21–46.
[47]	Patell JM (1976) Corporate forecasts of earnings per share and stock price behavior: Empirical test. J Account Res, 246–276.
[48]	Redl C (2018) Macroeconomic uncertainty in south africa. S Afr J Econ 86: 361–380. doi: 10.1111/saje.12198
[49]	Rosenthal SS, Strange WC, Urrego JA, (2021) JUE insight: Are city centers losing their appeal? Commercial real estate, urban spatial structure, and COVID-19. J Urban Econ, 103381.
[50]	Ruddock L, Lopes J (2006) The construction sector and economic development: the "Bon curve". Constr Manag Econ 24: 717–723. doi: 10.1080/01446190500435218
[51]	Strobel J (2015) On the different approaches of measuring uncertainty shocks. Econ Lett 134: 69–72. doi: 10.1016/j.econlet.2015.06.012
[52]	Tse RYC, Ganesan S (1997) Causal relationship between construction flows and GDP: evidence from Hong Kong. Constr Manag Econ 15: 371–376. doi: 10.1080/014461997372926
[53]	Wibowo A (2009) The contribution of the construction industry to the economy of Indonesia: A systemic approach. Available from: http://eprints.undip.ac.id/387/1/Agung_Wibowo.pdf.
[54]	Wigren R, Wilhelmsson M (2007) Construction investments and economic growth in Western Europe. J Policy Model 29: 439–451. doi: 10.1016/j.jpolmod.2006.10.001
[55]	Wilhelmsson M, Wigren R (2011) The robustness of the causal and economic relationship between construction flows and economic growth: evidence from Western Europe. Appl Econ 43: 891–900. doi: 10.1080/00036840802600020
[56]	Wu X, Zhang Z (2005) Input–output analysis of the Chinese construction sector. Constr Manag Econ 23: 905–912. doi: 10.1080/01446190500183974
[57]	Yamak N, Koçak S, Samut S (2018) Türkiye' de inşaat sektörünün kısa ve uzun dönem dinamikleri. Muğla Sıtkı Koçman Üniversitesi İktisadi ve İdari Bilimler Fakültesi Ekonomi ve Yönetim Araştırmaları Dergisi 7: 96–113.
[58]	Yang Z (2001) An application of the hedonic price model with uncertain attribute-The case of the People's Republic of China. Prop manag 19: 50–63.
[59]	Yayar R, Karaca SS (2014) Konut Fiyatlarına Etki Eden Faktörlerin Hedonik Modelle Belirlenmesi: TR83 Bölgesi Örneği. Ege Acad Rev 14: 509–514.

QFE-05-04-028-s001.pdf

Reader Comments

Your name:*

Email:*
© 2021 the Author(s), licensee AIMS Press. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0)