Street Name Fluency and Housing Prices

76 Pages Posted: 14 Oct 2019 Last revised: 17 Oct 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Maggie Rong Hu

Chinese University of Hong Kong

Adrian D. Lee

Deakin University - Department of Finance (Property and Real Estate); Financial Research Network (FIRN)

Date Written: October 15, 2019

Abstract

This study investigates whether and how street name fluency affects housing prices using a rich sample of housing sale transactions in Sydney, Australia. We find homes with shorter street names (only one word) are associated with a premium of 11.48% than those with three or more words in the street names, implying fluency preference. Meanwhile, street names with fewer letters are priced with a -0.6% discount, that is, street names with fewer words but more letters (longer words) are preferred. Moreover, homes with unique street names have statistically higher prices of 1.4% (or A$9,481) than those with more common names, suggesting disfluency preference. We argue this is consistent with the consumption context effect as homes are special occasion purchases where exclusivity and uniqueness are desired. In addition, homes with less fluent street names are valued more conditional on the street name is rare or the home is in the luxury price range, further confirming the disfluency premium given exclusivity preference. Our results are robust to a matched sample approach utilizing pairs of similar home sales on different streets. Overall, our findings shed light on understanding how name fluency affects the investment decision of special occasion goods such as real estate.

Keywords: name fluency, hedonic pricing, real estate, behavioral economics

JEL Classification: R00, O18, P22, R21

Suggested Citation

Agarwal, Sumit and Hu, Maggie Rong and Lee, Adrian D., Street Name Fluency and Housing Prices (October 15, 2019). Available at SSRN: https://ssrn.com/abstract=3463539 or http://dx.doi.org/10.2139/ssrn.3463539

Sumit Agarwal

National University of Singapore ( email )

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

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

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

Deakin University - Department of Finance (Property and Real Estate) ( email )

70 Elgar Road
Melbourne, VIC 3125
Australia

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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