Wrong. Irrationality can cost buyers – and sellers – big time.
Deakin University behavioural economist Adrian Lee told the ABC that buyer irrationality was “shocking”.
“We are just people, we don’t have a finance background or any sort of mathematical background,” Professor Lee said.
“…you are susceptible to your behaviour and on aggregate this does mean that prices can become erratic.”
His research, and that of other clever academics around Australia, has identified some curious characteristics that mean buyers are likely to pay more – or less – for an otherwise comparable property.
Check out the weird ways our minds can get in the way of a rational purchase.
- Weather: Selling on a sunny day? Expect to make 1 per cent more than if you sold on a cloudy day or a very hot or cold day, says Professor Lee.
- Planes: Think you can pick the difference in aircraft noise down to a decibel? Apparently buyers can. Some studies show house prices and rents can be discounted by as much as 1 per cent per decibel of aircraft noise once a baseline noise level is crossed.
- Schools: We know school zones can attract high demand, but did you know a school’s NAPLAN test results correlate with property prices? A 5 per cent increase in NAPLAN results increases house prices by around 1 per cent, according to a Monash University study.
- Crime: If you live in the same vicinity as the scene of a murder you could find you have more than just bad juju to deal with. For a year after the murder property prices are likely to be depressed by around 5 per cent within a 300 metre radius.
Ready to test your wits on a house purchase? View our current listings for sale.