The Impact of Auctions on Residential Sales Prices: Australian Evidence

16 Pages Posted: 26 Aug 2010

See all articles by Andrew Lepone

Andrew Lepone

University of Sydney; Financial Research Network (FIRN)

Alex Frino

The University of Sydney - Discipline of Finance; Financial Research Network (FIRN)

Vito Mollica

Macquarie Graduate School of Management; Capital Markets CRC Limited (CMCRC); Macquarie University, Macquarie Business School

Anthony Vassallo

The University of Sydney - Discipline of Finance

Date Written: August 25, 2010

Abstract

This study re-examines the variation in selling prices between the auction and private treaty method of sales. Using sales data from five major Australian capital cities over a four year period, we estimate a hedonic pricing model. Results indicate that for house sales, auctions lead to greater selling prices across all cities examined. However, results for unit sales reveals that this auction premium is only evident in two cities where auctions are less prevalent. Further analysis reveals that self-selection (where a particular method of sale is selected to maximise the selling price) is evident across the sample. After controlling for this self-selection bias using a two-stage model, houses sold via auction generally command a higher price. This suggests that the auction method of selling provides a price premium over the private treaty method of sale.

Suggested Citation

Lepone, Andrew and Frino, Alex and Mollica, Vito and Vassallo, Anthony, The Impact of Auctions on Residential Sales Prices: Australian Evidence (August 25, 2010). Available at SSRN: https://ssrn.com/abstract=1665933 or http://dx.doi.org/10.2139/ssrn.1665933

Andrew Lepone (Contact Author)

University of Sydney ( email )

University of Sydney
Sydney NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Alex Frino

The University of Sydney - Discipline of Finance ( email )

Futures Research Centre
P.O. Box H58
Sydney NSW
Australia
+61 2 9299 1809 (Phone)
+61 2 9299 1830 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Vito Mollica

Macquarie Graduate School of Management ( email )

Capital Markets CRC Limited (CMCRC) ( email )

Level 3, 55 Harrington Street
Sydney, 2000
Australia

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Anthony Vassallo

The University of Sydney - Discipline of Finance

P.O. Box H58
Sydney, NSW 2006
Australia

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