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The cost of a lucky price

Kwong Wing Chau, Danika Wright and Ervi Liusman

ERES from European Real Estate Society (ERES)

Abstract: Real estate buyers pay a premium for lucky properties. Using a large sample of Hong Kong apartment sales, we show that the transaction price itself is priced as a property attribute when it ends in a lucky 8 digit. This explains our observation of price clustering. Hedonic regression modelling is used to show that properties which sell at a lucky price also sell for a 1.4 percent premium, on average. Unlike lucky floor premium, lucky price premium does not exhibit luxury goods characteristics and is not sensitive property price cycles. This shows that the lucky price premium is attributed to cultural heuristics. The results are robust to alternative model specifications.

Keywords: behavioral economics; House Prices; Price endings; Superstition (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2018-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_240

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