Exploiting the unique institutional setting of Hong Kong’s real estate market, we uncover a curious ripple
effect of haunted houses on the prices of nearby houses. Prices drop on average 19% for units that
become haunted, 9% for units on the same floor, 6% for units in the same block, and 1% for units in the
same estate. Our study makes two contributions. First, we provide an estimate of a large negative spillover
on prices caused by a quality shock. Second, we find that the demand shock rather than the fire sale
supply shock explains most of the spillover.