A STUDY ON HOMEOWNERS' PRICE SETTING BEHAVIOUR IN COLLECTIVE SALES

Abstract

The objective of this research aims to examine the dynamics behind homeowners’ price setting behaviour in collective sales. This aspect is explored through subjective, cognitive and objective parameters to study the respondent’s behaviour. The discussion is carried out by examining the different price forging behaviours of “pro-enblocers” and “anti-enblocers”. A discriminant analysis is further conducted to identify key variables that facilitate differentiation between the two parties. Thereafter, a discriminating framework is constructed for the classification of new cases. The scope of the study includes homeowners who have experienced or are experiencing the collective sale of their private property in the years 2006-2008, in Singapore. Surveys were adopted as the research method and results were analysed through the use of crosstabs, correlation and chi-square studies as well as discriminant function analysis. Results indicate that homeowners are generally loss aversive, and are unwilling to lower their price expectations despite the number of attempts at collective sale. This suggests that homeowners continue to harbour high level of confidence in the collective sales market. Such optimism is largely premised on price anchoring from landmark collective sales. The study also revealed that “pro-enblocers” are more driven by the need to establish equality in terms of payoffs and are more likely to be influenced by herd mentality. A general concern of homeowners in collective sales, remains largely on replacement costs concerns. This study therefore hopes to add to the limited amount of literature on collective sales in Singapore.