How Your Beliefs Can Impact Your Property Wealth
By Greville Pabst on 30 Apr 2014
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Should you let your superstitions have an impact on your property decisions?
Photo: Alan Turkus
Buying a home is one of the single biggest financial decisions most people make in their lives.
Given the importance of this decision, you would think buyers would engage a rational approach to property selection.
However, in some cases our preexisting beliefs can have a very powerful influence on consumer psychology and our decision-making processes, and not always for the better.
In particular, I’m referring to superstitious beliefs and their impact on property purchases.
What Kind of Affect Does Superstition Have on Property?
Superstition, defined as an irrational belief in an incorrectly perceived causal relationship between two objects and/or actions, is something with which most of us are familiar.
Whether we consciously attribute significance to it is arguable, but it’s not uncommon to ‘knock on wood’ and avoid black cats or walking under ladders to safeguard against jinxing oneself.
In fact, according to research, superstition is so powerful that in America each time a Friday 13th occurs the US economy sustains a loss of an estimated $850 million, as people avoid marrying, travelling and even working on that day.
“Our pre-existing beliefs can have a very powerful influence on consumer psychology and our decision-making processes…”
Our superstitious belief in the number 13, among others, has historically seen many high-rise buildings skip or rename the 13th floor, or in some cases utilise it for the building’s plant room.
The effect can also be found at some airports and hospitals where there are no gates and rooms with the number 13.
Is There a Relationship Between a Property’s Street Number and its Sale Price?
When it comes to buying property, many real estate agents claim that buyers from Asian cultures won’t even consider a home if the street number doesn’t stack up.
In some cases they will pay a premium for those that do – with 4 and 14 considered the unluckiest and 8 and 9 the luckiest.
This got me wondering, do superstitious beliefs have a measurable impact on the value of a property?
Theoretically, strength of demand from buyers may be associated with a greater or poorer sale price based on the level of competition.
However, an analysis of standalone house sales in the five years to 2013 at street numbers 4, 8, 9, and 14 in areas with a high proportion of people of eastern lineage, including Box Hill, Springvale and Richmond, found no macro measurable causal relationship between a property’s street number and its sale price.
“Many real estate agents claim that buyers from Asian cultures won’t even consider a home if the street number doesn’t stack up.”
That is, there was no discernible difference or pattern in prices at the aforementioned street numbers when comparing each one’s median of sales results.
In order to check the validity of these findings I shifted focus to other areas of Melbourne, including suburbs such as Caroline Springs, Craigieburn, Pakenham and Cranbourne in Melbourne’s mortgage-belt areas where there are concentrated proportions of house sales – and also included number 13 in the analysis.
The macro analysis of over 5,500 sales across Melbourne once again demonstrated no measurable causal effect between the median of sales results for specific street numbers and investment performance.
While this research doesn’t seek to dismiss the claim that some buyers may attribute lesser or greater value to a property based on its street number, it does confirm that street numbers are not an effective or reliable measure of a property’s performance potential and therefore should not be included as criteria for choosing a property when buying for investment purposes.
A property’s value is most typically impacted by location, land size, building improvements (the type, size and condition of the dwelling), orientation and aspect, with no widely applicable evidence to support the claims that a property’s street number has a bearing on its value.
