Bidding,Auctions,and House Purchase

In this paper, the economics of house purchase are examined, in particular in relation to bidding in housing auctions. A small postal survey of recent movers in the City of Glasgow is analysed to indicate the factors associated with economic rent accruing to the seller. Although there are important a priori links between auction theory and house purchase through informational asymmetries which could yield testable propositions, there are fundamental areas of difficulty. Auction analysis is essentially static whereas house purchase is primarily a process wherein market makers have a pivotal role. Nonetheless the need for further research into housing auctions and purchase behaviour is identified and supported. In particular, further research of a more qualitative and experimental methodology is strongly urged. This should be the first step in the integration of housing economics with a more microeconomic study of process and outcome at the point of house purchase.