Impact of Asking Price Signals on House Buyer Behavior: Evidence from Ho Chi Minh City

Abstract

This study explores how potential homebuyers in Ho Chi Minh City respond to critical market signals, particularly unusually low asking prices and extended listing durations. Using a three-step approach and survey data from 448 recent buyers of self-built homes between June 2017 and May 2018, the research provides new insights into buyer behavior in a rapidly growing but information-constrained housing market. Contrary to common belief, our findings reveal that houses listed at significantly below-market prices do not attract eager buyers but instead trigger skepticism, resulting in lower transaction prices and prolonged time on the market. Additionally, the Cox proportional hazards model highlights the crucial importance of the first 30 days of listing, where the probability of a sale is highest. As time passes, buyer suspicion increases, leading to a declining likelihood of sale and reinforcing the “stigma effect” of extended listing times. These findings challenge traditional pricing strategies and offer valuable implications for sellers and real estate agents navigating dynamic and competitive housing markets