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The cost of a lucky price

Author

Listed:
  • Kwong Wing Chau
  • Danika Wright
  • Ervi Liusman

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.

Suggested Citation

  • Kwong Wing Chau & Danika Wright & Ervi Liusman, 2018. "The cost of a lucky price," ERES eres2018_240, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2018_240
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    References listed on IDEAS

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    More about this item

    Keywords

    behavioral economics; House Prices; Price endings; Superstition;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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