Melting Pot or Salad Bowl: Cultural Distance and Housing Investments
67 Pages Posted: 17 Aug 2015 Last revised: 22 Nov 2017
Date Written: November 1, 2017
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: Suggested Citation