Abstract
Based on urban economics, behavioural economics and western economics theory, we analysed the effects of air pollution on the real estate market through VAR model and IRF using the AQI and the residential commercial housing market data from January 1, 2015 to June 30, 2020. We found that there is intrinsic link between changes in air pollution levels and changes in real estate market. When air pollution levels increase, it will have a sustained inhibitory effect on housing price and housing turnover. The effect on housing price will last about 5 months and the effect on housing turnover will last about 2 months. After having a comparative analysis of the IRF of the average price in six jurisdictions in Shanghai we found that inhibitory effect which air pollution impact on real estate market has different forms of expression. Residents in areas with relatively poor air quality are more willing to pay for clean air and housing transactions in areas with relatively good air quality are more sensitive to air pollution.
Highlights
Since the Industrial Revolution, modern productions make people's lives convenient, and cause the problem of resource shortage and environmental degradation to society
We analysed the impact of air pollution on the real estate market based on VAR model and impulse response function, using the air quality index and residential commercial housing market data from January 1, 2015 to June 30, 2020 in Shanghai
Based on results of Granger causality test, we could determine that Air Quality Index (AQI) index has a two-way Granger causal relationship with the average house transaction price and the transaction area, and a single Granger causal relationship with the housing transaction area. It suggests that there is an internal relation between changes in air pollution levels and changes in the real estate market
Summary
Since the Industrial Revolution, modern productions make people's lives convenient, and cause the problem of resource shortage and environmental degradation to society. The real estate market involves a wide range and strong industrial correlation, and its development has a great impact on people's living standard, local government's fiscal revenue and the industrial structure of the national economy. We have to pay attention to the impact of environmental changes on the development of the real estate market. In China the people's living needs have been gradually changed from the need for material culture such as warmth and fullness to the need for a better life such as democracy and the rule of law, fairness and justice and beautiful environment. People's yearning for a better life is becoming more and stronger, the requirements of the living environment gradually improve, and air quality, as an environmental factor directly affects the healthy, is bound to have an impact on the real estate market. If the answer is yes, is the impact of air pollution on the real estate market time-sustaining? These are issues that need to be explored in depth in this paper, and these questions do not give clear empirical evidence in existing studies
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
