The impact of social influence in Australian real estate: market forecasting with a spatial agent-based model

Benjamin Patrick Evans (), Kirill Glavatskiy, Michael S. Harré and Mikhail Prokopenko
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Benjamin Patrick Evans: The University of Sydney
Kirill Glavatskiy: The University of Sydney
Michael S. Harré: The University of Sydney
Mikhail Prokopenko: The University of Sydney

Journal of Economic Interaction and Coordination, 2023, vol. 18, issue 1, No 2, 5-57

Abstract: Abstract Housing markets are inherently spatial, yet many existing models fail to capture this spatial dimension. Here, we introduce a new graph-based approach for incorporating a spatial component in a large-scale urban housing agent-based model (ABM). The model explicitly captures several social and economic factors that influence the agents’ decision-making behaviour (such as fear of missing out, their trend-following aptitude, and the strength of their submarket outreach), and interprets these factors in spatial terms. The proposed model is calibrated and validated with the housing market data for the Greater Sydney region. The ABM simulation results not only include predictions for the overall market, but also produce area-specific forecasting at the level of local government areas within Sydney as arising from individual buy and sell decisions. In addition, the simulation results elucidate agent preferences in submarkets, highlighting differences in agent behaviour, for example, between first-time home buyers and investors, and between both local and overseas investors.

Keywords: Agent-based modelling; Spatial models; Housing markets; Decision-making; Social influence; Trend following (search for similar items in EconPapers)
JEL-codes: C63 D91 H31 O18 R31 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11403-021-00324-7

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