Melting Pot or Salad Bowl: Cultural Distance and Housing Investments

67 Pages Posted: 17 Aug 2015 Last revised: 22 Nov 2017

See all articles by Yongheng Deng

Yongheng Deng

University of Wisconsin - Madison - School of Business

Maggie Rong Hu

Chinese University of Hong Kong

Adrian D. Lee

University of Technology, Sydney - Finance Discipline Group; Financial Research Network (FIRN)

Date Written: November 1, 2017

Abstract

We investigate whether individuals’ cultural background affects their housing investment decisions, drawing inference from property location choice and transaction prices. Utilizing housing transaction data of culturally diverse city Sydney Australia, we find that investors are more likely to buy properties in neighborhoods with a shorter cultural distance to their culture of origin and are willing to pay a premium for properties in those locations, consistent with investors’ preference for cultural proximity. Further, we show that culture proximity preference is stronger for ethnicities from recent migration waves, particularly Asia. Our findings have implications for the role of culture preference on housing investments.

Keywords: culture distance, housing price, information friction, home culture preference

JEL Classification: R00, O18, P22, R21

Suggested Citation

Deng, Yongheng and Hu, Maggie Rong and Lee, Adrian D., Melting Pot or Salad Bowl: Cultural Distance and Housing Investments (November 1, 2017). Available at SSRN: https://ssrn.com/abstract=2645533 or http://dx.doi.org/10.2139/ssrn.2645533

Yongheng Deng

University of Wisconsin - Madison - School of Business ( email )

4110 Grainger Hall
975 University Avenue
Madison, WI 53706
United States
+1 (608) 262-4865 (Fax)

HOME PAGE: https://bus.wisc.edu/faculty/yongheng-deng

Maggie Rong Hu (Contact Author)

Chinese University of Hong Kong ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Hong Kong, N.T.
Hong Kong

Adrian D. Lee

University of Technology, Sydney - Finance Discipline Group ( email )

PO Box 123
UTS Haymarket Campus
Broadway, NSW 2007
Australia
95147765 (Phone)
95147722 (Fax)

HOME PAGE: http://https://www.uts.edu.au/staff/adrian.lee

Financial Research Network (FIRN)

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

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

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