Matching in Housing Markets: The Role of Ethnic Social Networks

65 Pages Posted: 21 Dec 2016 Last revised: 6 Jul 2018

Sumit Agarwal

National University of Singapore

Hyun-Soo Choi

Singapore Management University - Lee Kong Chian School of Business

Jia He

Nankai University - School of Economics

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Date Written: July 3, 2018

Abstract

This paper investigates the role of ethnic matching between buyers and sellers in housing markets. Using unique public housing datasets in Singapore, we find that sellers sell homes in blocks with a high concentration of their own (other) ethnic group at significant premiums (discounts). Chinese sellers get more than 1.7% premiums when selling homes to Chinese buyers in housing blocks with high concentrations of Chinese residents, but Malay sellers accept 1.6% discounts from Malay buyers in the same blocks. We find that the high volume of the within-ethnicity transactions with the price discounts is supported by the ethnic social networks, i.e. through ethnicity-specialized real estate agents.

Keywords: Ethnic Matching, Social Networks, Housing Transactions, Cash-Over-Valuation (COV)

JEL Classification: D80, R21, R28

Suggested Citation

Agarwal, Sumit and Choi, Hyun-Soo and He, Jia and Sing, Tien Foo, Matching in Housing Markets: The Role of Ethnic Social Networks (July 3, 2018). Georgetown McDonough School of Business Research Paper No. 2888268. Available at SSRN: https://ssrn.com/abstract=2888268 or http://dx.doi.org/10.2139/ssrn.2888268

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Hyun-Soo Choi

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Jia He

Nankai University - School of Economics ( email )

Wenjin Road
Tianjin, TianJin 300071
China

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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