Early real estate indicators during the Covid-19 crisis : a tale of two cities

In this paper we use two years worth of daily housing platform data (October 2018 to September 2020) to construct early market indicators for London and Vienna. The timing of the dataset allows us to track the influence of the Covid-19 pandemic almost in real time. In particular, we construct indicators on price development, price-rent ratio, market volume, time-on-market, market turnover, and market sentiment. We introduce a new market sentiment indicator, which we construct from the direction and frequency of sellers' online price changes. To capture the market sentiment from the buyers’ perspective we provide Google-trends indicators based on housing related key-word searches. We find that the Covid-19 pandemic has triggered very different initial reactions in the two housing markets: The London housing market shows signs of weakening since the beginning of the Covid-19 pandemic in the form of decreases in list prices, market liquidity, and turnover. In contrast, the Vienna housing market shows increases in list prices, market liquidity and turnover, as well as a stable positive market sentiment. In terms of indicator reliance we show that changes in listing composition (as happened during the March/April London lock-down) can upset the positive correlation of online price indicators with the underlying housing market situation. This implies that special care must be taken to insure that changes in the composition of listed data do not drive the indicator results. It also suggests that it is better to consider a group of these early indicators together rather than relying on individual indicators.