Individuals’ real estate investment decisions are influenced more by the train effect than by personal propensity to take risks: study

This photo taken on July 28, 2020 shows apartment complexes in southern Seoul. (Yonhap)

SEOUL, March 1 (Korea Bizwire)Individuals’ real estate investment decisions are influenced more by their desire to go with the flow than by their personal propensity to take risks, according to a study released Monday.

Seoul National University’s Institute for Social Development and Policy Research conducted a survey of 1,200 Seoul citizens and rated their responses using a 4-point scale.

At 34.7%, more than a third of respondents said they plan to buy a home within the next two years. Their propensity to bandwagon scored 4.12 points, the highest of any group.

The running propensity score for those planning to buy homes in the next two to five years was 3.82 points, and that for those with no such plans was 3.58 points.

Individuals with higher bandwagon propensity scores had a higher potential to actively invest.

When the propensity to train score increases from 1 point to 6 points, the degree of willingness to actively invest increases from 4 points to 8 points (on a scale of 10).

“What lies behind the strong learning and bandwagon effect is public distrust of the effect of government policy,” said Professor Kim Seok-ho, director of the Institute for Social Development and Policy Research and author of the report.

“The public anticipates that the government’s housing policy will fail, sharing the belief that house prices will continue to rise contrary to the government’s policy position.”

Ashley Song ([email protected])