Does it Pay to Escape Herding Behaviour in the Housing Market?

Olszewski Krzysztof ()
Additional contact information
Olszewski Krzysztof: College of Business Administration, SGH Warsaw School of Economics, al. Niepodległości 162, 02-554 Warszawa, Poland

Real Estate Management and Valuation, 2025, vol. 33, issue 2, 123-134

Abstract: This article discusses whether it is reasonable for a house buyer to escape herding behavior in the housing market, that is buying when prices rise. We add to the behavioral economics literature, which usually describes in detail why house buyers are irrational but gives usually little recommendations what should be done to make them behave more rationally. We focus our analysis on Poland, a post-socialistic country with a still inadequate housing stock. We compare the costs and gains of buyers that take out a mortgage versus those who rent housing in Warsaw, Poland. The calculation for the period 2010-2022 shows that buying is profitable in the long-term, despite the fact that it is often irrational in the short term. We conclude that only an improvement in the rental market, which absorbs a lot of demand, can make those who need housing become patient and take more rational purchase decisions.

Keywords: behavioural economics; house purchase decisions; alternatives; rental market (search for similar items in EconPapers)
JEL-codes: D11 D14 G41 R21 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/remav-2025-0020 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:remava:v:33:y:2025:i:2:p:123-134:n:1010

DOI: 10.2478/remav-2025-0020

Access Statistics for this article

Real Estate Management and Valuation is currently edited by Sabina Zrobek

More articles in Real Estate Management and Valuation from Sciendo
Bibliographic data for series maintained by Peter Golla ().