The Rational and Irrational Factors Underlying Property Buying Behavior

Abstract

Property buying behavior is part of the development of financial behavior. This research will be focused on the buyers perspectives on residential and commercial properties in Bali Island of Indonesia. Rational and irrational factors are the factors underlying the property buying process. The Physical, Location, Environment, Finance factors were part of the rational; while Psychological (over-confidence, conservatism bias, information and familiarity, herd behavior, mental accounting, and loss aversion), Emotion, Intuitional, Socialization, Evaluation were the irrational part. The purpose of this study was, first, to determine the factors that distinguish buyers behavior toward purchasing a property; second, to determine the factors that distinguish buyers behavior between buyers intending to live in compared to those seeking to invest. The study sample consisted of individuals who are prospective buyers and those who have bought property in Bali. Data were analyzed using Discriminant Analysis. The results showed that only financial factor that had significant impact on buyer decisions. Furthermore, this study also showed that there were significant differences in factors between buyers intending to live in compared to those seeking to invest. The factor were psychology, emotion, intuitional, and evaluation.

Factors Affecting The Decision Of Home Buying Of Millenial During The Covid-19 Pandemic

“…Property buying behavior is part of the development of consumer financial behavior. So that the financial aspect factors have a significant influence in purchasing decisions (Anastasia, 2015). The financial aspect is considered an important factor in influencing the decision to buy a house by the millennial generation.…”

Property investment decision-making behaviour amidst market disruptions: an institutional perspective

“…According to ( Parker, 2014 ) , the influence of human intelligence and strategic thinking now dominates property investment decision-making. As evidence continues to emerge that property investors skip processes (Diaz, 1999; Lowies et al , 2016) and are often driven by emotion (Gallimore et al , 2000; Sah, 2011), scholars have documented investment behaviours like framing, anchoring, herding, loss aversion and representativeness in property literature (Diaz, 1999; Anastasia, 2015; Lowies et al , 2016). The current trend has informed a more detailed and interpretative approach to decision-making, which has resulted in a multi-dimensional conceptualization of the task (Gallimore and Gray, 2002; Chukwudumogu et al , 2018).…”

“…The theory is relevant in property investment and has contributed significantly towards understanding the behavior of investors in an ideal situation (Roberts and Henneberry, 2007). However, more recently, economists are sceptical about the general applicability of rational choice theory (Anastasia, 2015; Nsibande; Boshoff, 2017). Sah (2011) and Gigerenzer and Selten (2001) argue that property investors do make irrational decisions as they are not always provided with all the information they require to optimize their decision-making choices.…”

The Prominence of Financial Considerations on Housing Investors’ Purchase Decisions

“…Rational and irrational factors are the factors underlying the property (house) buying process. The physical, location, finance, and environment are rational factors, while psychological, emotional, intuitional, socialization, and evaluation are irrational factors (Anastasia & Suwitro, 2015).…”