EFFECT OF BEHAVIORAL BIAS ON REAL ESTATE PRICES IN KENYA (A CASE OF REAL ESTATES IN KIAMBU COUNTY)

Abstract

The study sought to find the effect of behavioral finance concepts (or biases), on the effect of real estate prices in Kiambu County. The study used descriptive survey design. The finding of the study revealed that overconfidence bias, herding effect, gamblers fallacy and regret aversion positively influenced real estate market prices. Results of the inferential statistics such as unstandardized regression coefficients showed a positive effect on real estate prices in Kenya. This further indicated that these behavioural bias factors had a significant effect on real estate prices in Kenya as indicated by the low p values. Regression model showed that there was positive relationship between behavioural bias factors and real estate prices in Kenya. The behavioral bias calls for a serious concern in any business investment, the more reason why this study turned a beam light on the subject matter. From the findings of the study, it was revealed that behavioral biases influence real estate prices in Kenya. Thus the study concluded that behavioral biases influence real estate prices in Kenya. Regarding demographic characteristics of the respondents, the study concluded that behavioral biases is an issue that is crosscutting regardless of gender, marital status, age, education level and so on. Based on objective one, the study found out that there was a significant relationship between overconfidence bias and real estate prices in Kenya. Thus the study concluded that overconfidence affects real estate prices in Kenya positively. The study found out that there is insignificant relationship between herding effect and real estate prices in Kenya. Thus the study concluded that herding does not influences real estate prices in Kenya. Thus the study concluded that gamblers fallacy influences real estate prices in Kenya. It was found out that regret aversion have a significant relationship with real estate prices in Kenya. Thus the study concluded that regret aversion influence real estate prices in Kenya. Based on the findings of this research it was recommended that the individual investors need to analyses the investment factors carefully using the reasonable business knowledge before making an investment decision. The investors should also be able to interpret the market and economic indicators of various industries and firms in the market since they influence the performance of the real estate investment.