Consumer Purchase Decision-making Behavior And House Price Fluctuation

The development of the real estate market is a major issue related to the national economy and people's life.In recent years,the real estate market in our country has developed rapidly,and house price fluctuates significantly.The cause of price fluctuations is the core issue of real estate economics research.Research has focused on explaining price fluctuations from the perspective of economic fundamentals and rational expectations.However,it does not explain fully the real estate market's anomaly such as sharp fluctuations in housing prices in the short term.Behavioral economics relaxes the hypothesis of a fully efficient market and rational economic man,and introduces behavioral decision theory in psychology into the traditional economic analysis framework to supplement and extend it.The decision-making of the micro-subjects of the real estate market whose ability to handle information is also different in the process of purchase decision is vulnerable to the external environment and internal psychological factors due to information asymmetry and incomplete information,which easily produces cognitive judgment bias and herding behaviors.In turn,all of these factors have a profound impact on price fluctuations.This article first summarizes the literature on the influencing factors of housing price fluctuations and the study of house price volatility from the perspective of behavioral economics,and analyzes in detail the characteristics of real estate and real estate prices.Then it explores the possibility of researching the house price volatility problem from the microscopic perspective of the irrational decision-making behavior in real estate market introducing behavioral economics theory.Secondly,it analyzes the supply and demand situation of Wuhan real estate market and the status quo of house price volatility,and finds the irrational evidence of Wuhan real estate market.Then,under the framework of behavioral economics,the irrational factors in the decision-making process of the micro-subjects in the real estate market are analyzed in three aspects:cognition,evaluation,and emotion.Among them,in the process of house purchase choice of individuals,their cognitive ability limitations and emotional factors such as regret aversion and overconfidence will result in the emergence of systematic cognitive bias,such as heuristic bias,anchoring and adjustment,framed dependence,etc.The evaluation process is also easily affected by the characteristics of diminishing sensitivity,loss aversion,and mental accounts.Individual deviations can easily develop into group deviations through the transmission of herding effects,causing house prices to deviate from their intrinsic value and fluctuate.Thirdly,this paper designs questionnaires of the house purchase behaviors of consumers in Wuhan real estate market to test whether the above-mentioned irrational characteristics exist in the real estate market in Wuhan.Questionnaires are distributed not only in the marketing center but also by the purchase groups in Wechat to collect data.The research found that psychological factors have a significant impact on the decision-making behavior of house buyers and differences were reflected among respondents with different backgrounds.Finally,the research conclusions of this paper are elaborated and specific policy recommendations from the perspectives of buyers,governments,etc and the prospect for further study are put forward.