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Longitudinal Study: HILDA
Title: Home Price Beliefs in Australia
Authors: Windsor, Callan 
La Cava, Gianni 
Hansen, James
Institution: Reserve Bank of Australia
Publication Date: 19-May-2014
Pages: 41
Keywords: Housing
Consumer behaviour
Abstract: We document some new stylised facts about how Australian homeowners value their homes using household panel data and unit-record data on home sale prices. We find that homeowners' price beliefs are unbiased at the postcode level, on average, although there is considerable dispersion in the difference between beliefs and prices across postcodes. Household characteristics, such as age and tenure, and the regional unemployment rate are correlated with differences between beliefs and prices. We also find evidence that the difference between beliefs and prices has explanatory power for average household consumption, leverage and portfolio decisions after controlling for the market-inferred value of the home. These facts provide empirical evidence to support recent literature on the importance of belief formation for household decision-making.
Keywords: Housing; Beliefs and Values; Housing -- Intentions
Research collection: Reports and technical papers
Appears in Collections:Reports

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