Virtual domination? The online domination ofhousing search

Richard Dunning, PhD Student

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Contents

• Background to the research

• Research Questions

• Methods

• Results

• Conclusions

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Background to research

Search matters:Failure of NC/Seller emphasis to explain housing outcomesLack of research into buyersRestriction of opportunitiesEquity issues related to accessibility of informationChanging roles of search media

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Background to research

• Failure of mainstream economic models to regularly predict housing market outcomes – switch to understand search behaviour

Policy makers

Behavioural economics

• Dearth of recent housing search research (e.g. seminal text Rossi, 1980, Maclennan, 1982)

• Growth in desire to understand buyer behaviour

• Fundamental change to apparent search techniques (emphasis on internet research into estate agents and sellers)

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Background to research

• Restriction of opportunities• Institutions arise in housing markets because of the local and complex nature of market characteristics

• Advertising media present opportunities for buyers

• The internet opens up more properties than traditional media (and may act as a substitute)

• Access to the internet therefore may influence the opportunities and therefore housing outcomes

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Background to research

•The internet changes transaction costs• Whilst more properties are available for consideration, more information is also available about those properties (e.g. house price history) and area information (e.g. local schools, newspapers purchased)• Information is available from home (change in access may change perceptions about cost of information)

• Changes in availability over search• Changes in aspirations over search

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Research Questions

1. How comprehensive is internet usage in property search?

2. When do households use the internet (search stages)?

3. How important was the internet in their search?

4. What is the relationship between internet usage and search type?

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Method

• Limitations of controlled experiments

• Sheffield in 2010

• In depth interviews with recent movers to confirm terminology

• Pilot Survey to 100 addresses

• Extensive postal survey to 4,843 addresses of properties sold in 2010

• 469 responses (9.68% of all transactions)

• Unequal representation

• How comprehensive is internet usage in property search?• Overall usage - 87% of HH used the internet to search for a property

• Age – Sharp decline in usage for buyers over 70

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Results: Q1. Ubiquity of Internet

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Results: Q1. Ubiquity of Internet• How comprehensive is internet usage in property search?

• IncomeHouseholds with incomes below £15,000 are less likely to use the internet than

households with higher incomes (age? Access?)

Households with incomes over £60,000 are less likely to use the internet than households with median incomes (outsource search? Fewer properties? Higher cost of time?)

• PriceHouseholds purchasing a home for less than £80K were less likely to use the internet

than higher priced home households

Above £80k there is no clear correlation between price and internet usage

• GeographyCity centre and South Community Assemblies have the highest levels of internet usage

Remainder of city forms a periphery varying from 13-20% non-internet usage

Highest levels of non-usage fall in the South West and North East (20% and 18% resp.)

• New BuildHouseholds who purchased new build properties were significantly less likely to use the

internet than households that purchase older properties (35% to 12% - low sample no.)

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Results: Q1. Ubiquity of InternetThoughts:

• The internet is used by the majority of households in their property search

• Usage is not consistent across households

• If use of the internet presents more housing opportunities, restricted access prevents potentially suitable properties from the choice set

• Access to larger choice sets is restricted for elderly households and lower income households – inequitable information asymmetry (may result in distortions in the market)

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Results: Q2. When?• When do households use the internet?

• Most frequently cited information source throughout

• Two groups of internet users emerge: households that use the internet equally throughout the search and those who use the internet heavily at first and then less after beginning physically viewing properties (anchors and framing effect)

 First Consider

Move First viewing First Offer Throughout Never

Personal Knowledge 39.6 9.4 3.5 41.0 6.5

Friends and relatives 29.4 13.6 6.4 25.3 25.3

Newspapers 24.2 4.6 3.7 17.1 50.4

Estate agents window 25.8 10.9 4.6 20.5 38.2

Estate agent in person 14.5 20.0 12.9 18.3 34.3

Estate agent website 29.8 13.3 4.3 31.0 21.7

Internet property search 35.4 6.4 2.6 42.2 13.4

Internet area search 19.5 11.3 10.4 20.7 38.1

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Results: Q2. When?• When do households use the internet?

• Mean age is lower for use throughout (37), and most use at beginning (40) than mean overall (43)

• Mean income is higher for households that used the internet often throughout the search (£35-40k) than households who never used the internet (£25-27.5k) and households who used the internet most later in the search process (e.g. most used at first offer on a home £22.5-25k)

• No clear distinction between means of when the internet is used and home price

• Younger, higher income households more likely to use the internet throughout the search process and more likely to use it often when first considering moving home.

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Results: Q3. Importance?• How important was the internet in their search?

• Most frequently cited Very Important

• Only Personal Knowledge was cited less frequently Unimportant

 Very

Important ImportantModerate

ImportanceOf Little

Importance Unimportant

Personal Knowledge 57.1 29.8 7.4 2.8 2.8

Friends and relatives 24.5 25.2 14.7 15.6 20.0

Newspapers 6.5 12.3 16.8 23.0 41.4

Estate agents window 7.6 18.1 19.6 21.0 33.7

Estate agent in person 8.9 15.7 18.6 20.4 36.5

Estate agent website 33.8 27.7 11.6 9.4 17.4Internet property search 59.0 19.4 5.1 5.8 10.7

Internet area search 21.9 19.0 16.5 16.7 26.0

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Results: Q4. Relationship?• What is the relationship between internet usage and search

type?• Households who used the internet throughout spent less long between

beginning searching and moving (mean 12months) than those who never used the internet (mean 18months)

• Households that used the internet often moved in less time (13m) than households who never used the internet (18m), however, households that did use the internet but only seldom spent longer searching (19m)

• Households that used the internet often started searching for a property in less time after first considering moving (3m)than households who used the internet less frequently (7m) or not at all (10m)– this may be due to the ease of accessing preliminary search information from the internet.

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Results: Q4. Relationship?• What is the relationship between internet usage and search

type?• Households who never used the internet physically viewed half as many

properties (4) as households that used the internet very often (9), and placed offers on fewer properties (1.25 to 1.73)

• No major difference in search length pressure between levels of internet usage

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Conclusions• The internet is used by the majority of movers to search for a

new property (and its importance is greater than ‘traditional’ information sources)

• Internet use varies substantially and relates to age (with possible correlation to income)

• Two groups of internet users: households who use the internet throughout their search and households who use the internet intensively at the start and less after they start viewing properties physically

• Users of the internet are likely to shorten the overall length of search and physically view more properties than households who never use the internet.

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Further analysis of data

• Relationship between information source and search trigger

• Relationship between info source and previous experience

• Relationship between internet use and meeting initial aspirations

• Further testing of household characteristics, e.g. education, relationships

• Spatial analysis of respondents, and internet usage against distance of move