Impacts of Market Sentiment on Residential Property Auction Sale

Abstract

Previous researches had noted the importance of market sentiment in affecting the auction outcome but empirical evidence is scarce and superficial. This study extends the previous research and provides new evidence by investigating the determinants of residential property auction sale from the aspect of market sentiment of housing and auction itself. Logit and Ordinary Least Square (OLS) regression will be used to analyze residential property auction data of Kuala Lumpur, Malaysia from 2009-2013. In Malaysia, auction sale is mainly used to sell distress properties. Although there is a significant increase of auction properties in recent years, property auction market of Malaysia still lack of discourse. Thus, it gives the reason of choosing Kuala Lumpur, the capital city of Malaysia which is active with real estate activity and excessive speculation, as the study market. The result shows that the sentiments of housing and auction have significant but opposing impacts on the auction outcome. High auction market sentiment increases the probability of auction sale, but reduced if housing market sentiment is high. This research will benefit the practitioners by helping them for the planning of buying or selling strategy.