Can Perceptions of Property Market Volatility and Optimism Be Affected by Message Framing and Market Familiarity?

Extant literature from a variety of disciplines note that the perceptions of individuals are influenced by context or message framing. In general, a frame can be regarded as some combination of the beliefs, values, attitudes and mental models that people adopt to apprehend and comprehend a situation. The frame significantly affects how individuals infer meaning and hence understand a situation. Slovic (2002) studying affect heuristics found that these occur when a decision maker is influenced by the emotional context of information. With the exception of Jin and Gallimore (2010), little research has been undertaken into this phenomenon in the context of property markets. They found that framing can act to alter people's market perceptions. There is also evidence from the property literature that market familiarity can affect property decision making (e.g. Diaz and Hansz (2001), Diaz, Gallimore and Levy (2004)). This study aims to examine both the effect of message framing and how this may be affected by market familiarity.An experiment is undertaken with data collected from 181 participants drawn from first, second and third year students completing a Bachelor of Property degree from The University of Auckland, New Zealand. The findings demonstrate not only that negative framing of commercial property market information increases the perceptions of greater market volatility and decreases optimism within the market. It also finds the impact to be greater for unfamiliar markets.