Heterogonous buyers and housing transaction prices: a case study of Guangzhou, China

We investigate whether and the extent to which buyer's characteristics affect housing transaction prices. Using the transaction data of existing apartments from 2014 to 2017 in Guangzhou, China, our results show that buyer's locality, motivation and financial ability affect the transaction prices. Non-local buyers pay a premium. First-time buyers gain a discount. Experienced repeat buyers for upgrading pay a premium. We also find that buyer's financial ability affects purchasing power and transaction prices. The buyers paying the acquisition with mortgage gain a higher discount or pay a lower premium than their counterparts paying in cash. Internet use itself won't affect transaction price. When it is combined with buyer's other characteristics, the buyers using the internet to obtain the property information have an information advantage over the ones using the traditional method and gain a higher discount or pay a lower premium than their counterparts using the traditional method, especially for the non-local. This finding is important for market participants and regulators to improve market efficiency and transparency by improving the accuracy of the information disclosed on the Internet.