‘Smarter Information, Smarter Consumers’? Insights into the Housing Market

Abstract

This study explores how information helps housing consumers make informed decisions and discusses potential market outcomes. We analyse the interaction between the disclosure of information on property conditions and the disparity between home sellers’ willingness to accept (WTA) and home buyers’ willingness to pay (WTP). Three hypotheses are derived and validated through field experimental investigation within the property market. We find that the WTA–WTP disparity exists. The discussed policy instrument for information disclosure appears to function as expected. The WTA–WTP disparity is considerably reduced after information disclosure, and market liquidity and efficiency are improved. This study is an important complement to prior research on how information changes the behaviour of consumers in housing markets. Findings can inform the central government about the wide use of smart disclosure in the near future, as well as the scope, format and structure of information to be supplied to general housing consumers.