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COVID-19 Infects Real Estate Markets: Short and Mid-Run Effects on Housing Prices in Campania Region (Italy)

Author

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  • Vincenzo Del Giudice

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

  • Pierfrancesco De Paola

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

  • Francesco Paolo Del Giudice

    (Department of Industrial Engineering, University of Naples “Federico II”, Piazzale Vincenzo Tecchio 80, 80125 Naples, Italy)

Abstract

The COVID-19 (also called “SARS-CoV-2”) pandemic is causing a dramatic reduction in consumption, with a further drop in prices and a decrease in workers’ per capita income. To this will be added an increase in unemployment, which will further depress consumption. The real estate market, as for other productive and commercial sectors, in the short and mid-run, will not tend to move independently from the context of the aforementioned economic variables. The effect of pandemics or health emergencies on housing markets is an unexplored topic in international literature. For this reason, firstly, the few specific studies found are reported and, by analogy, studies on the effects of terrorism attacks and natural disasters on real estate prices are examined too. Subsequently, beginning from the real estate dynamics and economic indicators of the Campania region before the COVID-19 emergency, the current COVID-19 scenario is defined (focusing on unemployment, personal and household income, real estate judicial execution, real estate dynamics). Finally, a real estate pricing model is developed, evaluating the short and mid-run COVID-19 effects on housing prices. To predict possible changes in the mid-run of real estate judicial execution and real estate dynamics, the economic model of Lotka–Volterra (also known as the “prey–predator” model) was applied. Results of the model indicate a housing prices drop of 4.16% in the short-run and 6.49% in the mid-run (late 2020–early 2021).

Suggested Citation

  • Vincenzo Del Giudice & Pierfrancesco De Paola & Francesco Paolo Del Giudice, 2020. "COVID-19 Infects Real Estate Markets: Short and Mid-Run Effects on Housing Prices in Campania Region (Italy)," Social Sciences, MDPI, vol. 9(7), pages 1-18, July.
    • Handle: RePEc:gam:jscscx:v:9:y:2020:i:7:p:114-:d:380577
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    References listed on IDEAS

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    23. Nadia Balemi & Roland Füss & Alois Weigand, 2021. "COVID-19’s impact on real estate markets: review and outlook," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 35(4), pages 495-513, December.
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