Locals may be interested in new research shedding light on investor behaviour and its impact on Auckland's property market.

A doctoral thesis by Dr David White explores the relationship between investors and house price escalation in Auckland between 2003 and 2018.

Dr White's research utilised behavioural economics and the user-cost equilibrium model to understand how property decisions were made.

By interviewing investors, banks, and real estate agents, he identified that investor reliance on biases and heuristics—mental shortcuts in decision-making—contributed to upward pricing trends.

“Behavioural economics proposes that when making decisions, we sometimes take ‘shortcuts’ in our analysis, such as relying on biases and heuristics rather than objective analysis,” said Dr White.

“There was strong evidence for biases and heuristics in investor decision making in Auckland, and these all had an effect of an upside bias in pricing and thereby contributed to house price escalation.”

His findings align with the widely held view that investors have played a role in driving up property prices.

Dr David White.

However, Dr White also uncovered a surprising dimension to investor motivations.

Many participants in the study noted a 'social good' aspect, highlighting the role investors play in providing quality homes and lease term certainty for tenants.

Dr White’s work offers valuable insights for potential buyers.

He advises exercising caution when entering the market, noting that house price escalation is often cyclical.

A graduate of Massey University, Dr White has contributed to the property sector for decades and currently teaches property development at the university’s School of Economics and Finance.

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