Estimating the effect of being close to outdoor activities on cottage prices: The case of Northern Finland before and after Covid-19

• Main Author: Elovirta, Salla
• Other Authors: Turun kauppakorkeakoulu, Turku School of Economics, Taloustiede, Economics, Taloustieteen laitos, Department of Economics
• Format: Other/Unknown Material
• Language: English
• Published: 2022
• Subjects: cottages; second home; real estate market; Covid-19; pandemic; difference-in-difference; Kuusamo; Northern Finland; Lapland
• Online Access: https://www.utupub.fi/handle/10024/173498

In the beginning of 2020, a global pandemic Covid-19 spread around the world, affecting people’s lives in multiple ways. In addition, many of the global and local markets were impacted, for example the real estate markets. In this thesis the changes the cottage real estate markets of Northern Finland have experienced are examined by looking at cottage prices per square meter before and after the pandemic. Northern Finland is defined as the entire area of Lapland and the municipalities of Kuusamo and Pudasjärvi. Nature is abundant in Northern Finland and urban areas are scarce, and most of the popular activities are outdoor activities: in winter downhill skiing and Nordic skiing and in summer hiking and mountain biking. The purpose of this thesis is to look into if in Northern Finland Covid-19 has impacted the price per square meter of cottages near Nordic skiing, hiking and mountain biking -tracks differently than of cottages near downhill skiing locations. The topic of cottages, which are sometimes also called second homes or free-time residences, and especially cottage prices has not been widely researched in the past, and seemingly not at all in Northern Finland. This thesis aims to add to the topic of cottage real estate prices and to start the research on the topic in Northern Finland. Difference-in-Difference analysis is used as the analysis method, to find if there have been differences in reactions to Covid-19 between cottages in different locations. The model created derives also from the theory of hedonic price model, as a basis for how to estimate the effect on price of attributes external to the properties. For the analysis data on cottage sales in Northern Finland from 2017 to 2021 was received from the Federation of real estate agency in Finland. It was found that in answer to the research question, the connection between Covid-19 and cottage price per square meter seems to be heterogeneous based on how close to it is to which outdoor activities. Being near downhill skiing activities seems be ...