Information transparency and pricing strategy in the Scottish housing market

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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 oncecommon
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
Pages (from-to)429-450
Number of pages22
JournalInternational Journal of Housing Markets and Analysis
Issue number2
Early online date7 Jun 2021
Publication statusPublished (in print/issue) - 25 Feb 2022

Bibliographical note

Publisher Copyright:
© 2021, Emerald Publishing Limited.


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


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