São Paulo - Brasil
23 a 25 de Setembro de 2015
Rohayu Ab Majid 1 , Rosli Said 2
1 Department of Estate Management, Faculty of Architecture, Planning & Surveying,
Universiti Teknologi Mara, 40450 Shah Alam, Selangor, Malaysia.
Email: rohayumajid@salam.uitm.edu.my
(corresponding author)
2 Department of Estate Management, Faculty of Built Environment, University of
Malaya, 50603 Kuala Lumpur, Malaysia
Email: rosli_alambina@um.edu.my
ABSTRACT
Housing is a basic human need and considered as the most expensive item in the life of a certain group of people. The high cost of owning a housing unit will affect the level of affordability among public at large.
This is because the unique criteria of properties and different environmental conditions at a certain location contribute to high house prices. This situation directly affects people placement mode either as a tenant or homeowner. In fact, every placement decision is always influenced by various factors such as properties itself and the current financial situation. This research aims to examine the extent to which these factors affect the placement decision toward the best residential properties. Putrajaya, the main administrative centre of the government of Malaysia, situated in a self-contained township on its own has been chosen as a case study. A group of respondents was interviewed to consider their decision on housing placement in the township. A total number of sub-factors were analyzed using a Chi-square test to establish the significant effect on residential placement. The study found that these preference factors played significant roles in influencing the placement decision of residential properties by the public in a township area.).
Keyword: Residential Placement, Affordability, Housing, Township, Malaysia
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1.
Introduction
Housing is a basic human requirement ( Majid et al , 2014 ) that needs to be met on a priority basis .
House would provide protection for people (Teck-Hong, 2012) . House purchasing would involve a high cost, which relatively more expensive as compared to other necessity goods.
Therefore, owning a home is the dream of each, where the buyer considers a mixture of factors before making the most important decision in their life (Coolen & Hoesstra, 2001).
Considerable work has been done on the overall concept of the housing markets concentrated on the analyses of housing demand and supply (Adair et al , 1996; Cheshire and Sheppard, 1998;
Goodmans and Thibodeau, 1998; Case and Shiller, 2003). There have also been attempts to build empirical models of the housing sector which include housing equations explaining expenditure, investment and the financing of housing demand and supply (MacLennan, 1977; DiPasquale and
Wheaton, 1994).
Perhaps, the most analysed area is that of income elasticities of demand
(Malpezzi and MacLennan, 2001; Harter-Dreiman, 2004).
The discussion of the concept of the housing markets vary from one researcher to another since housing is a complex good made up of several attributes such as space (internal or external), location and other physical characteristics (Adair et al , 1996; Barker, 2003). Under normal market conditions, houses, unlike any other goods and services, have become expensive over time when compared to income (Barker, 2003). Cheshire and Sheppard (1998) identify the value households place on housing attributes such as floor space, number of bedrooms, central heating, garage, type of unit, the type of street in which the unit is situated and the amount of open space in the neighbourhood. In addition, locations, areas and markets with similar features are also considered by households (Barker, 2003).
This paper intends to focus on factors influencing purchasers’ decision in placing the choice of their housing unit. First, the literature review is conducted to cover the factors influencing the house buyers in making their placement decision. In the next section, the theoretical framework is established. Then, follows the discussion on research methodology and analysis. Thereafter, conclusions are made based on statistical findings.
2.
Literature Review
In dealing with housing placement, factors influencing house buyers’ decision have been widely discussed (Botschen et al., 1999; Gengler et al., 1999, Coolen & Hoekstra, 2001). There are two major factors that become the public attention in doing the best decision-making towards residential placement namely financial and product factors. Through these components, they can be expanded to justify public priorities towards decision-making on residential placements.
Product factor
Product is one of the factors that is often considered ( Botschen et al., 1999 ) in making a placement decision. It is emphasized on the characteristics of the residential unit (Gengler et al.,
1999; Coolen & Hoekstra, 2001; Manivannan & Somasundaram 2014) . It can be classified into two categories, namely internal and external factors. Internal factor can be referred to house’s conditions (Zinas & Jusan,2012; Abdul Majid et al, 2015) meanwhile external factor can be referred to surrounding conditions or natural environment related to housing scheme
( Montgomery and Curtis, 2006 ).
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Internal factors of a house may be referred to the characteristics of the existing dwelling house.
Among these is the type of house that will be populated (Hui et al, 2014).
Various types of home
(terrace, semi-detached and detached) are often considered by the buyer in making the decision to live in a residential building. House furnishings would also be emphasized by the residents
(Opoku, Abdul-Muhmin, 2010) beside the variety of attractive design from residential buildings
(Opoku, Abdul-Muhmin, 2010; Al-Momani, 2000; Rahadi et al, 2013; Bhatti & Church, 2004) .
Ideally, the house designs would meet and support the needs of a family ( Zaiton & Ahmad
Hariza, 2012).
Besides, people also emphasize on layout plans in each residential unit
(Manivannan & Somasundaram 2014) as well as the quality of a house (Wihelmsson, 2002;
Jiboye, 2012) before making any decision for residential placement. In fact, size of building
(Wihelmsson, 2002, Opoku, Abdul-Muhmin, 2010; Ommeren & Zijl, 2013; Danko et al 1990;
Al-Momani, 2000) and the number of available space (Opoku & Abdul-Muhmin, 2010) are also taken into consideration. The decision of residential placement is also affected by the age of the building (Hui et al., 2014) as well as the topography of the location (Kullmann, 2014).
External factors are referred to the home environment and the surrounding area ( Hui et al., 2014;
Manivannan & Somasundaram, 2014). Thus, aspects that are often under consideration of residential placement are facilities ( Rahadi et al., 2013; Manivannan & Somasundaram, 2014 ) and amenities ( Kartik et al., 1992 ). Residents are hoping to live in an area that is close to various amenities such as schools and parks ( Montgomery and Curtis, 2006 ). In addition, the existence of accessibility is also considered as a key factor by prospective residents ( Ariyawansa, 2007;
Wang and Li, 2006 ). Even the location of the residence is to be near the commercial centre and workplace ( Montgomery & Curtis, 2006 ) and proximity to an efficient transport and systematic facilities ( Wang & Li, 2006 ). Also, residential placement emphasizes on comfort and safety
( Kellekci & Berkoz, 2006 ). According to Blakely and Snyder (1998), the houses that have been gated and guarded provide safety as compared to the scheme without such facilities. In the same situation, a safe and quiet neighborhood will also be a major consideration by the occupants
( Dokmeci et al., 1996; Al-Momani, 2000 ). Even the quality of the environment is also preferred by people ( Achtnicht & Madlener, 2014; Djebarni & Al-Abed, 2000 ). Residential placements are also influenced by the level of traffic congestion in the area ( Bolitzer & Netusi, 2000). In addition, the landscape might influence people to choose the unit for their accommodation.
Financial factor
Finance is also an important factor ( Opoku & Abdul Muhmin, 2010; Manivannan &
Somasundaram, 2014) and often considered by buyers when making a decision to allocate a suitable home. The availability of housing loans by financial institutions ( Endut & Hua , 2009;
Kim, 2004) typically provides an opportunity to the public at large to have the desired home
(Opoku & Abdul Muhmin, 2010).
Home financing in Malaysia remains traditionally unchanged since the liberation of the property market in the 1980's and a boom period in the 1990's; halted only during the 1997-1998 Asian Financial Crisis (Ezeanya, 2004 ). However, the high monthly payment of housing loans incurs a higher cost to buyers. According to Hoff & Stiglitz (1990) , high-interest rates will increase the monthly payment. The rules of thumb suggest this amount not to exceed one-third of the total income of the borrower ( Linneman & Megbolugbe, 1992 ) .
High monthly payment is the main reason for the failure of the public to have the desired home
( Yates et al., 2007 ). Mortgage availability to the household is also dependent on loan-to-value
(LTV) ratio (Almeida et al., 2006) which is used as a guide for lending risk assessment. The financial institutions would usually evaluate the purchasers’ ability before approving the loan.
Thus various aspects of finance have always been considered by the buyer including the monthly loan payment, house price during purchasing (Opoku & Abdul Muhmin, 2010; Zainudeen et al.
2006 ), home ownership status, the LTV ratio and ability to repay the loans.
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Based on the literature above, the theoretical framework of the research has been established as shown in Figure 1. The figure shows that both financial and product factors will influence the public preference in deciding their residential placement.
Financial
Factor
Product Factor
(Internal &
External)
Public
Preference
Residential
Placement
Figure 1: Theoretical Framework
3.
Research Methodology
This research was conducted within the city of Putrajaya, as one of the most successful township areas in Malaysia. Putrajaya was developed as the administrative city of the Malaysian government. The data was obtained through the questionnaire distribution to the public who work in and around Putrajaya area. Questionnaires have been developed from two main factors that affect the people choice on residential placement. A total of 31 elements has been tested to justify how far these aspects really influence their judgment in making the best decisions on the desired residential placement.
A total of 122 samples were tested to evaluate the reliability level of each element and review the extent to which the element had an impact on the public consideration. Prior to the analysis, the whole sample must first be divided into multiple data sets to get appropriate sample size. Out of
122 samples, only 86% (105) has been selected as sub-set data (I). Then 89% (93 samples) from the subset data (I) has been set out to be the final sub-set data (II) for running the whole analysis.
The final sub-set data has been set out to provide a sample of populations who are living around
Putrajaya and staying in their house.
Main Data Set Sub Set Data (I) Sub Set Data (II)
Figure 2: Distribution structure of data set
The final data set has been carried out with reliability test to see the reliability of 30 elements expressed in this study. All of the elements were analyzed by person chi-square to see how far these elements have been considered by the public to opt for their residential placement.
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4.
Results
Table 1 shows the seven types of respondent profile namely marital status, type of house, number of households, income, age, gender and employment sector. All of the information is display in percentage.
Table 1: Respondent Profile
Background
Area of stay
Inside Putrajaya (%) Outside Putrajaya (%)
Marital Status
Type Of House
Total Number Of
Household
Household Income
Your Age
Sector Employment
Gender
Single
Married
Divorce
Bungalow
Semidetached
Terrace
Cluster
Condominium
Apartment/Town House
Other
3
4
1
2
>5
<RM1500
RM1501-RM2500
RM2501- RM3500
RM3501-RM4500
RM4501-RM5500
RM5501-RM6500
RM6501-RM7500
RM7501-RM8500
>RM8000
21-25 years
26-30 years
31-34 years
35-40 years
41-45 years
46-50 years
>51 years
Government
Private
Male
Female
7.4
9.8
3.3
5.7
8.2
12.3
39.3
57.4
28.7
54.1
32.0
4.1
5.7
8.2
25.4
42.6
2.5
47.5
3.3
4.1
4.1
9.0
13.1
72.1
0.8
10.7
7.4
7.4
8.2
4.9
19.7
11.5
18.0
8.2
5.7
0.8
0.8
3.3
3.3
5.7
0.8
4.1
0.0
0.8
3.3
0.0
1.6
12.3
0.0
4.1
1.6
0.0
0.0
0.8
4.1
1.6
0.8
3.3
2.5
2.5
0.0
1.6
0.0
3.3
2.5
4.1
13.1
0.8
9.0
4.9
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Table 2 shows the reliability of all elements chosen for the study. Overall, all of the elements display the high value of Cronbach’s alpha (> 0.75). It is clear that all of these aspects can be adopted for this research
Table 2: Reliability Test
Main Factor Sub Factor Cronbach's Alpha
Cronbach’s
Alpha by factor
Financial Monthly Loan Payment
House Price when Purchased
The Ratio Of The Loan
Repayment Of The Loans
.865
.866
.878
.866
0.8667142
House Price/Rental House .861
Product Factor
(Internal)
Home Ownership Status
Type Of House
Finishing Home
Home Design
Interior Features
House Quality
Home Layout Plan
Structure Of The Building
Size Of The House
Spaces In The House
House Age
Topographic
Property Interest
.863
.861
.859
.856
.856
.857
.858
.857
.857
.857
.856
.858
.853
0.85708333
Product Factor
(External)
Near To Commercial
Close To Public Service
Near To Education Service
Near To work Place
Environmental Quality
Security Housing
The Level Of Traffic Congestion
Housing Density
Landscape/ Views/ Attractive Green
View
Outside Home Are Quite Systematic
Waste Management
Level Of Security
.859
.858
.859
.857
.856
.857
.857
.858
.856
.856
.858
.859
0.857
All elements have been tested for significant status (Table 3). The result shows that 29 elements are significant (<0.05). One of the financial factor elements (Repayment of the Loans) is not significant (0.569).
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Main
Factor
Financial
Factor
Sub Factor
Monthly Loan Payment
House Price when Purchased
The Ratio Of The Loan
Repayment Of The Loans
Table 3: Significant Value
Asymp. Sig. (2sided)
.000
.000
.000
.569
House Price/Rental House .000
Product
Factor
(Internal)
Product
Factor
(External)
Type Of House
Home Ownership Status
Finishing Home
Home Design
Interior Features
House Quality
Home Layout Plan
Structure Of The Building
Size Of The House
Spaces In The House
House Age
Topographic
Property Interest
Near To Commercial
Close To Public Service
Near To Education Service
Near To work Place
Environmental Quality
Security Housing
The Level Of Traffic Congestion
Housing Density
Landscape/ Views/ Attractive Green
View
Outside Home Are Quite Systematic
Waste Management
Level Of Security
.000
.000
.000
.023
.001
.000
.000
.000
.000
.000
.000
.000
.000
.000
.000
.000
.000
.000
.000
.001
.003
.001
.000
.000
.000
Significant value ≤0.05
Through the Pearson Chi-Square person test (Table 4), 29 significant variables were analyzed to evaluate the aspects that are considered by the public in choosing a house for residential placement. The results show that all of the elements studied indicated at a moderate level, with the highest value at 59.436
a and the lowest value at 29.971
a
.
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Table 4: Pearson Chi-Square
Main Factor Sub Factor
Financial Monthly Loan Payment
Factor
Product
Factor
(Internal)
House Price when Purchased
The Ratio Of The Loan
House Price/Rental House
Type Of House
Home Ownership Status
Finishing Home
Home Design
Interior Features
House Quality
Home Layout Plan
Structure Of The Building
Size Of The House
Spaces In The House
House Age
Topographic
Property Interest
Pearson Chi-Square value
46.774
a
58.757
a
59.436
a
41.871
a
47.949
a
56.180
a
42.358
a
34.207
a
29.971
a
40.668
a
38.959
a
41.250
a
37.802
a
47.036
a
51.791
a
55.649
a
54.485
a
Product
Factor
(External)
Near To Commercial
Close To Public Service
Near To Education Service
Near To work Place
Environmental Quality
Security Housing
The Level Of Traffic Congestion
Housing Density
Landscape/ Views/ Attractive Green View
Outside Home Are Quite Systematic
31.605
a
30.532
a
50.423
a
31.912
a
34.521
a
55.877
a
44.265
a
47.356
a
34.573
a
38.361
a
36.778
a Waste Management
Level Of Security 40.681
a
Figure 3 shows that 29 of the 30 elements under study become the priorities of the public in placing their residential properties. However, the value of each element under three main aspects is different. Majority places on financial aspects as their main consideration, namely housing prices at the time of purchase (59%) and the ratio of loans (59%). They were followed by an element of topography and housing security respectively with the consideration of 56%. Loan repayment is indirectly not important for residential placement. Overall, only seven external product factors have generated a value of between 31% to 39%. They are “ near to commercial”
(32%), “close to public service” (31%), “near to work place” (32%), “attractive landscape and green view” (35%), “quite environment” (38%) and “waste management” (37%). While four elements under internal product factors indicated 30% to 40%, which are referred to “home design” (34%), “interior features” (30%), “home layout plan” (39%) and “house size” (38%).
Figure 3: The level of public preferences towards residential placement
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Conclusion
In conclusion, many factors have been considered by the public at large in making the best decision for their residential placement. Financial aspects are often associated with the purchasers’ ability to serve the financial institutions have continued to be one of the major factors influencing their decision on residential placement. Product factors are no longer confined to the size and quality of the building. Instead, it turned to another real estate aspect such as topography and safety. This is because today's society is more vulnerable to frequent natural disasters arising from the current activities and crime problems. Thus, the related aspects should be prioritized by the developer to deal with the above issues.
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