Yeojin Lee and Jun-Hyung Kim (2018. 6), "Out-of-local buyer's premium: borne by the search cost and anchoring effect," Journal of the Korea Planners Association, 53(3): 113-132.
Abstract
An extensive amount of overseas research has been conducted to test the impact of a buyer’s characteristics on house price from search cost and anchoring effect perspectives. However, little has been studied about the relationship between buyer’s characteristics and house price in Korea. Existing studies are based on the SPAR(‘Sales Price to Appraisal Ratio’) model and repeated sales model rather than the traditional hedonic price model due to unavailability of housing characteristics data. This study developed a hedonic equation, a regression of unit value on housing characteristics and buyer characteristics using apartment transaction data in one of the towns in Seoul to find the impact of buyer’s characteristics on the house price. The major findings are summarized as the following: first, out-of-local premium is KRW123,000/㎡; second, this premium is borne by the search cost and the anchoring effect, and the premium is KRW267,000/㎡ and KRW265,000/㎡ respectively; third, the anchoring effect can result in both premium and discount; lastly, the search cost increases for the out-of-local buyers, but it does not increase proportionately with the increase in distance.
Keywords
buyer characteristics; house price; out-of-local premium; search cost; anchoring effect; hedonic price model