Street Name Fluency and Housing Prices

71 Pages Posted: 14 Oct 2019 Last revised: 12 May 2020

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Maggie Hu

The Chinese University of Hong Kong

Adrian D. Lee

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

Date Written: May 12, 2020

Abstract

This paper examines whether and how street name fluency affects housing prices using a rich sample of housing transactions in Sydney, Australia. We find street names with longer words are preferred, i.e., homes on street names with more letters are priced with a 0.6% premium. Homes with unique street names are sold 1.6% (or A$10,835) higher than those with more common names, implying disfluency and uniqueness preference. Moreover, 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. This is consistent with the consumption context effect in the psychology literature that in the context of special occasion high-end goods, lower fluency and grater uniqueness makes the products feel more desirable and valuable. While we show disfluency preference on aggregate, we also find evidence of fluency preference by non-English speaking buyers and for new developments. Preferences for royal names or popular words proxied by Google Trends are also documented. 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 and Lee, Adrian D., Street Name Fluency and Housing Prices (May 12, 2020). 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 Hu (Contact Author)

The Chinese University of Hong Kong ( email )

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

HOME PAGE: http://sites.google.com/site/maggiehuresearch/research

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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