Transaction information costs in Beijing's housing market based on a Hedonic model

The transaction activities in a housing market with asymmetrical information were analyzed to estimate the transaction information costs of both the supply and demand sectors. Beijing housing market data from 2000 to 2008 was then input into a Hedonic model to estimate the variables affecting the transaction information costs. The results indicate that the asymmetrical information increases the information costs on both sides. The information cost for the supply sector is 15.2% of the transaction price while that for the demand sector is 19.1%, which shows that the demand sector is at a disadvantage in a housing market with asymmetrical information. Suggestions to reduce the information costs include improving the transmission channels of market information and the transmission efficiency to give more publicity to the supply sector; therefore, reduce the disadvantages on the demand side.