Information transparency and pricing strategy in the Scottish housing market

Nan Liu, Daniel Lo*, Michael McCord, Martin Haran

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review


    Information transparency is crucially important in price setting in real estate, particularly when information asymmetry is concerned. This paper empirically examines how a change in government policy in relation to information disclosure and transparency impacts residential real estate price discovery. Specially, we investigate how real estate traders determined asking prices in the context of the Scottish housing market before and after the implementation of the Home Report, which aimed to prevent artificially low asking prices.
    The paper employs spatial lag hedonic pricing models to empirically observe how residential asking prices are determined by property sellers in response to a change in government policy that is designed to enhance market transparency. It utilises over 79,000 transaction data of the Aberdeen residential market for the period of Q2 1998 to Q2 2013 to test the models.
    The empirical findings provide some novel insights in relation to the price determination within the residential market in Scotland. Our spatial lag models suggest that spatial autocorrelation in property prices has increased since the Home Report came into effect, indicating that property sellers have become more prone to infer asking prices based on prior sales of dwellings in close vicinity. The once-common practice of setting artificially low asking prices seems to have dwindled to a certain extent statistically.
    The importance of understanding the relationship between information transparency and property price determination has gathered momentum over the past decade. Although spatial hedonic techniques have been extensively used to study the impact of various property- and neighbourhood-specific attributes on residential real estate market in general, surprisingly little is known about the empirical relationship between spatial autocorrelation in real estate prices and information transparency.
    Original languageEnglish
    Number of pages22
    JournalInternational Journal of Housing Markets and Analysis
    Publication statusPublished - 7 Jun 2021


    • Real Estate
    • Spatial residential
    • Housing market analysis
    • Housing prices
    • Housing policy
    • Pricing model


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