Price Dynamics of Condominiums in the Commercial Capital of Sri Lanka with Respect to Inflation and Covid-19

Abstract

This study was conducted in Sri Lanka (Colombo, Dehiwala-Mount Lavinia, Sri Jayawardenepura Kotte municipalities) to analyse condominium price dynamics before and during COVID-19, along with a survey on expatriate’s willingness to invest in properties during the COVID period. The condominium selling price variation was similar to consumer goods, vehicles, and house price variations from 2011 to 2021. The condominium and house prices rose; however, only house prices increased sharply with COVID-19. For the stationarity check (Augmented Dickey-Fuller unit root test), condominium and house selling price, and house price inflation variables displayed non-stationarity at levels and first difference. Condominium price inflation variable was, however, stationary at level. However, conducting a cointegration test between non-stationary variables may lead to spurious results. The lack of studies regarding expatriates and property investments during the pandemic was attended in this study via questionnaires. Sixty-seven per cent and 19% showed interest in house and condominium investments, respectively, implying that the pandemic has not negatively affected the market. Further studies are recommended to capture the other socio-economic factors such as political stability and comparative analysis amongst different countries.