How Do the Olympics Impact Home Prices?

With the 2024 Paris Summer Olympics kicking off this month, Wahi looks at what kind of effect the Games have had on home prices in former host cities.

By Josh Sherman | 7 minute read

The 2000 Summer Olympics boosted house prices in Sydney in a big way, though not every host city sees the same outcome.

By the end of 2003, just three years after Sydney hosted the 2000 Summer Olympics, the median price of a house in the city had skyrocketed by a jaw-dropping 66.4%, according to recent analysis from PRD Real Estate.

The Olympics contributed significantly to the three-year surge in home prices, suggests Dr. Diaswati Mardiasmo, chief economist of PRD. And the dramatic rise in post-Olympic prices isn’t unique to Sydney. “We’ve had case studies where the buzz of the Olympics is so high that it does increase prices in a lot of the different capital cities around the world that have hosted an Olympics before,” she tells Wahi.

While the Olympics put real estate into overdrive in some host cities, research suggests the results can vary widely — and sometimes home prices end up lower than they would’ve been had the Games not taken place at all. “There was a range of outcomes… across the spectrum, from a decrease [in prices], to no effect, to a positive outcome,” says researcher Constantine Kontokosta of the findings from a 2012 study he undertook to compare prices in six former Olympic host cities before and after the Games.

The Connection Between the Olympics and Home Prices

Debate continues about whether hosting the Olympics benefits host cities when all costs are tallied. But there’s no denying the mega event injects billions into local economies, and an investment of that scale inevitably touches the real estate sector (and just about all others). “What we have seen is that the Olympics does contribute to price increases because it stimulates everything else that is in that particular city,” says Dr. Mardiasmo. “It touches literally every single part of the economy.”

In addition to the sports-and-entertainment facilities that are built in anticipation of the big event, local municipalities tend to make major investments in infrastructure, such as road networks and public transit. “Everything becomes better,” Dr. Mardiasmo adds. The private sector, meanwhile, also jumps in with both feet, throwing capital into developing new hotels, restaurants, and shopping districts. All of these developments have the gentrifying potential to make a place more desirable — and expensive. 

Improvements like the ones that Dr. Mardiasmo described are already taking shape in Brisbane, though it isn’t set to host the Summer Olympics until 2032. “That happens not just in Brisbane, but in most of the capital cities or most of the areas that are also hosting an Olympics,” she adds, noting investment — and potential price increases — take root long before the actual event itself. “People’s interest and people’s eyes are already on that particular place for quite a few years.”

All of these enhancements may also pump up local property prices by attracting private real estate investors, including foreign homebuyers who may not have previously considered — or even heard of — the market before. “Because of that [attention], then, a lot of international investors start to have a look at the property market in that particular area,” says Dr. Mardiasmo. “It puts that city on the map.”

However, speculative investment could also result in lower future home prices, according to Kontokosta’s study, entitled The Price of Victory: The Impact of the Olympic Games on Residential Real Estate Markets: “[I]f new supply, fuelled by speculation and government-subsidised investment, outpaces demand, it would be expected that a decrease in residential real estate prices would result, at least in the short term or until demand increases to meet supply and absorb existing inventory.”

How Strong Is the Olympic Effect on Home Prices? 

The extent to which prices rise (or fall) in a given host market varies and depends on many factors, from construction costs and the size of the labour pool to the overall supply-demand balance.

Overall, Kontokosta, a professor of urban science and planning at the NYU Marron Institute, says there are three broad determinants for whether the Olympics is a shot in the arm for home prices or not:

1. The host city’s status: “One [determinant] is the positioning of the city in the global economy,” he tells Wahi. A mid-tier city with a chance at becoming an international player — such as Sydney, when it first hosted the Olympics, in 2000 — has more upside potential than well-established world-class cities such as Tokyo, or current host Paris. 

“Of course there’s a huge influx of people coming into Paris to see the Olympics, but there’s a whole host of people who would go otherwise who are not going,” Kontokosta points out. “There is this effect of you’re just substituting one short-term group of folks for another group of people who won’t be coming.”

2. The host city’s goals: Certain cities have shot for the moon when it wasn’t realistic. “In some cases… the goals of a city were perhaps too big for what the Olympics could actually do,” says Kontokosta, who cites the 1996 Summer Olympics in Atlanta as a notable example of a failed moonshot. 

The hope was that the Games would help the Big Peach graduate from regional powerhouse to international hub — but that didn’t happen. In fact, it was one of three cities (the others were Calgary, 1998 and Los Angeles, 1984) in which Kontokosta noticed a negative impact on prices. “There were a number of stumbles,” says Kontokosta. (From poor transit planning, to a deadly act of domestic terrorism, there are many reasons some say Atlanta hosted one of the worst Olympics of all time.) Barcelona, on the other hand, successfully used the Olympics to generate financing and foreign investment to support a broader, ongoing growth plan. “Barcelona was probably one of the more positive examples,” says Kontokosta.

3. The size (and planning) of infrastructure investments: How much a city invests — and how well this investment is planned — is another make-or-break factor.

Some cities have let Olympic infrastructure crumble after the international community goes home. Images of once-glamorous abandoned facilities in Rio de Janeiro, which hosted the Games in 2016, are a cautionary tale. “It really does depend on what is the legacy that is being left after the Olympics,” says Dr. Mardiasmo. Recent host cities such as London and Sydney, she adds, have continued to pour resources into the neighbourhoods where you’ll find former-Olympic venues, and that in part explains massive post-games price gains.

Successful legacy planning, Dr. Mardiasmo suggests, depends on things like turning former athletes’ villages into high-quality housing and rezoning stadiums for new commercial uses once they’re no longer needed.

In the case of Sydney, Dr. Mardiasmo estimates that the Olympic legacy contributed to at least half of the 66.4% increase in home prices observed between 2020 and 2023. “The Sydney Olympics — their legacy program was excellent. Like, up until now, they still have new apartments, new things being built,” she explains.

What Do the Olympics Mean for Housing Affordability in Host Cities?

The Olympics’ impact on local housing affordability can be double-edged, Dr. Mardiasmo suggests. “The Olympics does impact affordability for the local people, and that’s because of that international exposure… more foreign investors, et cetera,” she says. “But, at the same time, it can work towards the economy.”

Similar to Toronto, she notes, Sydney is in the grips of a rental crisis, and foreign investment is helping increase housing supply. “It’ll impact the affordability for the local buyers, but then there’s also the good side of it: we do need more investors for our rental market — so it’s a little bit of a balance there.”

Kontokosta agrees the Olympics generally increases supply. But he emphasizes that when prices are still climbing in a market that has ramped up housing construction, affordability is deteriorating. “Obviously if you’re having house-price increases, affordability, all things being equal, is going to be squeezed,” he says. “Even if you have supply increases — if you’re still seeing increased prices, that means there’s increased demand and the supply is not keeping up.”