Matching in Housing Markets: The Role of Ethnic Social Networks

Sumit Agarwal, Hyun-Soo Choi, Jia He and Tien Foo Sing

The Review of Financial Studies, 2019, vol. 32, issue 10, 3958-4004

Abstract: This paper investigates the role of ethnic matching between buyers and sellers in Singapore’s public housing market. We find that sellers sell homes in blocks with a high concentration of their own (other) ethnic group(s) at significant premiums (discounts). Chinese sellers earn 1.7% higher premiums when selling homes to Chinese buyers in high Chinese concentrations housing blocks, but Malay sellers accept 1.6% discounts from Malay buyers in the same blocks. We find that the high volume of within-ethnicity transactions with the price discounts is supported by the ethnic social networks, that is, through ethnicity-specialized real estate agents.Received May 3, 2017; editorial decision July 4, 2018 by Editor Stijn Van Nieuwerburgh.

Date: 2019
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