People who have lived in areas where house prices are high are likely to pay too much when moving house, new research claims.
A paper entitled The Effect Of Previously Encountered Prices On Current Housing Demand, published by the Royal Economic Society, finds people determine the best price to pay for a house based on previously faced prices.
Uri Simonsohn and George Lowenstein examined 650 house movers between 170 US cities and found perceptions of a fair price differed considerably between buyers from different areas.
"Is an extra bedroom worth $400 (€336) a month? If you come to Pittsburgh from Manhattan, where an extra bedroom would cost you $800, it is likely to seem worth it. But if you come from Gadsden, where an extra bedroom would cost you $200, it isn't", said Prof Lowenstein.
The study also finds that over time movers bring their housing spending into line with the housing market in their new area.
Last month, the Central Bank intensified warnings that house prices were growing at unsustainable levels.
