(Luận văn) key factors affecting house purchase decision of customers in vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business

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PHAN THANH SI

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KEY FACTORS AFFECTING HOUSE
PURCHASE DECISION OF
CUSTOMERS IN VIETNAM
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SUPERVISOR: DINH THAI HOANG, Ph.D.

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MASTER OF BUSINESS (Honours)

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ID: 60340102

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Ho Chi Minh City - Year 2012


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ACKNOWLEGEMENTS

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First of all, I would like to express my deep appreciation to my supervisor, Dr. Dinh

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Thai Hoang who instructed and helped me enthusiastically during period of the

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thesis.

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I also would like to thank you all my colleagues and friends of Hoa Binh Corporation

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and Sacomreal for their valuable contributions to give comments and suggestion to

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revise the questionnaire survey.

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I am grateful to the supervisory board for providing me with their available advices

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and patient supports when I need.

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and doing thesis.

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I will never forget the friendly postgraduate students for helping me during studying

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The most special thanks go to my parents, my brothers and sisters who always create

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the most convenient conditions for me as well as support me all time.

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ABSTRACT

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The main purpose of the study is to investigate the effecting of key factors on housing

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purchase decision of customers in Vietnam. First, a model which is proposed based

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on analyzing of previous literature. Then the model is tested on a pilot test which is

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conducted of a small real estate professional group and another group of 15

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respondents, and on a larger survey of 263 samples. The study finds out a strong

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positive relationship between top two factors, including “living space”, “distance”

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and customers’ housing purchase decision. The three weaker positive relationship

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factors are “feature”, “finance” and “environment” to housing decision makers. It is

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also found that there is no difference in decision making of customers according to

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education level.

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different demographics consisting of gender, age, marital status, monthly income and

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Key works: real estate, purchase factors, Vietnam

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TABLE OF CONTENTS

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ACKNOWLEGEMENTS ........................................................................................ii

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ABSTRACT ...........................................................................................................iii

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LIST OF TABLES ................................................................................................ vii

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LIST OF FIGURES ..............................................................................................viii

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ABBREVATIONS ...............................................................................................viii

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CHAPTER 1. INTRODUCTION ....................................................................... 1
1.1.

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1.2.

RESEARCH PROBLEMS & RESEARCH QUESTIONS ............................. 1

1.3.

RESEARCH PURPOSE ................................................................................ 3

1.4.

SCOPE OF THE RESEARCH ...................................................................... 3

1.5.

RESEARCH STRUCTURES ........................................................................ 3

BACKGROUND ........................................................................................... 1

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LITERATURE REVIEW .............................................................................. 4

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2.1.

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CHAPTER 2. LITERATURE REVIEW ........................................................... 4

Feature ....................................................................................................... 4

2.1.2.

Living space ............................................................................................... 4

2.1.3.

Finance ....................................................................................................... 5

2.1.4.

Distance ..................................................................................................... 5

2.1.5.

Environment ............................................................................................... 5

2.1.6.

Purchase decision ....................................................................................... 6

2.1.7.

Demography ............................................................................................... 6

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CONCEPTUAL FRAMEWORK .................................................................. 7

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2.2.

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2.1.1.

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CHAPTER 3. RESEARCH METHODOLOGY ............................................... 8
RESEARCH PROCESS ................................................................................ 8

3.2.

SAMPLE SIZE ............................................................................................ 11

3.3.

MEASUREMENT SCALE ......................................................................... 11

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3.1.

3.4.

MAIN SURVEY ......................................................................................... 15

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Pilot test ................................................................................................... 11

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3.3.2.

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Measurement scale ................................................................................... 11

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3.3.1.


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3.5.

DATA ANALYSIS METHOD .................................................................... 15

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3.5.1.

Reliability measure ................................................................................... 15

3.5.2.

Validity measure by EFA (Exploratory Factor Analysis) .......................... 16

3.5.3.

Multiple regression analysis ..................................................................... 16

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CHAPTER 4. DATA ANALYSIS & RESULTS ............................................. 18

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4.1.

PREPARATION DATA .............................................................................. 18

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4.1.2.

Coding...................................................................................................... 18

4.2.

DESCRIPTIVE DATA ................................................................................ 21

4.3.

ASSESSMENT MEASUREMENT SCALE ................................................ 23

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Editing...................................................................................................... 18

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4.1.1.

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Cronbach’s Alpha ..................................................................................... 23

4.3.2.

Exploratory Factor Analysis (EFA) .......................................................... 26

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4.3.1.

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Assessment of data ................................................................................ 26

4.3.2.2.

Defining number of extracted factors .................................................... 27

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HYPOTHESES TESTING BY MULTIPLE REGRESSION ....................... 30

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4.3.2.1.

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Checking assumption of Multiple Regression ........................................... 30

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4.4.1.

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Sample size ........................................................................................... 30

4.4.1.2.

Assessment multicollinearity of independent variables.......................... 30

4.4.1.3.

Normality, linearity, homoscedasticity & outliers.................................. 30

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Evaluating the model ................................................................................ 31

4.4.3.

Evaluating the independent of variables ................................................... 31

4.4.4.

Checking hypotheses of model ................................................................. 32

4.4.5.

Analysis effect of control variables by Multiple Regression ..................... 34

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4.4.2.

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CHAPTER 5. CONCLUSIONS AND IMPLICATIONS ................................ 35

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5.3.

MANAGERIAL IMPLICATIONS .............................................................. 36

5.4.

RESEARCH LIMITATIONS & DIRECTIONS FOR FUTURE RESEARCH ......... 37

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RESEACH FINDINGS ............................................................................... 35

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5.2.

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RESEARCH OVERVIEW .......................................................................... 35

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5.1.


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REFERENCES .................................................................................................... 38
Appendix 1: The first draft of the questionnaire..................................................... 42

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Appendix 2: The English questionnaire ................................................................. 45

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Appendix 3: The Vietnamese questionnaire ........................................................... 49

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LIST OF TABLES
Table 3.1: Main factors affecting customers’ housing purchase decision ............... 13

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Table 4.1: Codebook of questionnaire items .......................................................... 18

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Table 4.2: Characteristics of respondents ............................................................... 22

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Table 4.3: Cronbach’s Alpha test results ................................................................ 25

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Table 4.4: EFA results ........................................................................................... 28

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Table 4.5: Correlations among variables ................................................................ 29

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Table 4.6: Coefficient table of MLR ...................................................................... 32

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Table 4.7: Hypotheses results ................................................................................ 33

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Table 4.8: Descriptive statistics ............................................................................. 54

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Table 4.9: Cronbach’s Alpha with full items for each constructs ........................... 54

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Table 4.10: KMO and Bartlett’s test ...................................................................... 56

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Table 4.11: Total variance explained ..................................................................... 56

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Table 4.12: Correlation among variables (Partial only) .......................................... 57

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Table 4.13: Factor Matrix ...................................................................................... 59

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Table 4.14: Factor Correlation Matrix ................................................................... 60

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Table 4.15: Model summary .................................................................................. 60

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Table 4.16: Anova ................................................................................................. 60

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Table 4.17: Casewise diagnostics .......................................................................... 60

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Table 4.18: Residuals statistics .............................................................................. 61

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Table 4.19: Cofficients of MLR including Sex_Render ......................................... 63

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Table 4.20: Cofficients of MLR including Marital_Render .................................... 64
Table 4.21: Cofficients of MLR including Education_Render ............................... 64

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Table 4.22: Cofficients of MLR including Age_Render......................................... 64

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Table 4.23: Cofficients of MLR including Career_Render ..................................... 65

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Table 4.24: Cofficients of MLR including Income_Render ................................... 65

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LIST OF FIGURES
Figure 2.1: Conceptual framework .......................................................................... 7

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Figure 3.1: Research process ................................................................................. 10

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Figure 4.1: Scree plot ............................................................................................ 58

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Figure 4.2: Regression standardized residual ......................................................... 62

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Figure 4.3: Normal P-P plot ................................................................................... 62

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Figure 4.4: Scatterplot ........................................................................................... 63

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ABBREVATIONS

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: Exploratory Factor Analysis

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: Vietnam Government Statistics Office

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EFA

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HCMC : Ho Chi Minh City
: Million

MLR

: Multiple Linear Regression

UEH

: University of Economic

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Mil.

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CHAPTER 1. INTRODUCTION

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1.1.

BACKGROUND

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As universal population levels continue to rise, the housing shortage in many

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developing countries has reached critical levels (Morel, 2001, p. 1119). Real estate

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is one of the most important things to citizens, so “the house purchase decision of

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them can change their life” (Wells, 1993). The house purchase decisions are

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different from other business decisions due to “the innate, durable and long-term

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characteristics of real estate”. It is a highly differentiated product with “each

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specific site unique and fixed in location” (Kinnard, 1968).

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In Vietnam, it is known as the third largest population in South East Asia and ranked

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the 14th largest in the world in terms of total population. Its population estimated of

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89 million in 2010 (GSO, 2011). The annual average growth population of Vietnam

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from 2000 to 2010 was approximately 1.03 million people per year or 1.2% annual

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growth. Particularly, one of the top economic centers of Vietnam is Ho Chi Minh
City which has around 7.2 million people as in April 2009, but its actual population

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is likely to be significantly higher because of unrecorded migration from rural areas.

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The real estate market in Vietnam has significantly changed during from the 1990s

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to now and it might be seen as three times fever and declining prices in the last 20
years. Up to the end of 2012, the large real estate outstanding loans and a big

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number of inventories created a serious crisis. However, according to the Deputy

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Minister of Construction Nguyen Tran Nam, he emphasized that “people’s housing

1.2.

RESEARCH PROBLEMS & RESEARCH QUESTIONS

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information”.

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demand is very large and solvency is high, but the real estate market lacked of

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Construction surveyed in 44 provinces up to August 30th, 2012, the country now

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satisfy customer demands. According to incomplete statistics of the Ministry of

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In general, the real estate in Vietnam has got many difficulties in making effort to


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had 16,469 unsold apartments, in which HCMC was 10,108 unsold apartments and

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total number of inventories of low buildings was 4,116, in which HCMC was 1,131

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ones (Anh, 2012).

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Therefore, the Prime Minister stressed that the solution to rescue real estate market

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should be included in the Resolution of the Government. The main reasons of the

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crisis were the real estate market supply did not meet customer demands, the

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investors lacked of exact information of customer and real estate market conditions.

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“There are two main fields of customer research are how customers go about

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making decisions and how decisions should be made. In addition, “creating true

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value for customer and customer notion focused approach” is confirmed (Edwards

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& Fasolo, 2001). It is found that “customer decision making is one of the most

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important areas of customer behavior and it requires gathering a lot of regarding

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information” (Bettman et al., 1998 & Simonson et al., 2001).

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There have been many published academic research about customer house purchase
with variety of both developed and developing countries. However, “the national

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and cultural characteristics play a very significant role in house purchase decision,

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that mean finding which is applied in specific context may not extend to another

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context” (Opoku & Abdul-Muhmin, 2010).

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The real estate in Vietnam has got specific characteristics to which connected

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customer demands closely. In recent years, researchers, domestic and foreign

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companies attracted to real estate field in Vietnam with a number of research works.

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However, there has been not enough research into the way customers making

customer decision.

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decision to buy real estate as well as which major factors have got relationship with

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questions of the thesis are raised as two following questions:

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Consequently, in the term of real estate purchase decision of customers, the research


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 What are the key factors affecting the house purchase decision of

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customers in Vietnam?

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 How is impact of these factors on house purchase decision of customers

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evaluated in Vietnamese context?

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Understanding relationship between main factors affecting customer house purchase

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decision is an important role for both real estate developers and enterprises to

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satisfy customers’ demand and to have available strategies in the real estate field.

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1.3.

RESEARCH PURPOSE

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Based on the research questions, the main purpose of this thesis is to identify what

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factors have impact on house purchase dicision of customers and examine how
these factors influence their decision of buying house in Vietnam.

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1.4.

SCOPE OF THE RESEARCH

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The research is conducted in Ho Chi Minh City with the respondents who are the

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postgraduates and students of UEH with various careers, as well as customers of a

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RESEARCH STRUCTURES

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1.5.

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the end of October in 2012.

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small book-coffee. The timeframe of research lasts from the middle of September to

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The research is divided into five chapters. The first chapter introduces about

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background, research problems, research questions, research purpose, scope of

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research and research structures. The second chapter covers literature review of the
previous research and shows hypotheses, as well as the conceptual framework of the

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research. The third chapter presents the research process, sampling size,

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measurement scale, main survey, and data analysis method. The fourth chapter

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future research.

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research findings, managerial implications, research limitations and directions for

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and hypotheses testing. Finally, the fifth chapter points out research overview,

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concentrates on preparation data, descriptive data, assessment measurement scale


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CHAPTER 2. LITERATURE REVIEW

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This chapter presents overview of previous literatures relating to housing purchase

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decision making of customers. Also, a conceptual framework is built up and relative

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hypotheses of research are raised.

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LITERATURE REVIEW

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2.1.

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2.1.1. Feature

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Firstly, “features” of the building structure itself is an important determinant of a

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household choice of residence (Quigley, as cited in Haddad, 2011, p. 234). Also, it

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is confirmed that “feature” has significant effects on customers’ house purchase

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decision making (Sengul et al., 2010, p. 214). The “feature” of house includes

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“design”, “house size” and “quality of building” determinants relating to decision

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making to buy a house of an individual (Adair et al., 1996; Daly et al., 2003; Sengul

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et al., 2010, p.218; Opoku & Abdul-Muhmin, 2010). As a result,

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H1. There is a positive impact of house features on customers’ house purchase

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2.1.2. Living space

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decision.

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Secondly, “private living space” is one of most important factors affecting to
“consumer housing decision”. Living space consists of “size of living room”, “size

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of kitchen”, “quantity of bathrooms” and “quantity of bedrooms” (Opoku & Abdul-

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Muhmin, 2010, p.219). In addition, it is accepted that there is relationship between

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Accordingly,

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the “space customer” and customers’ purchase making process (Graaskamp, 1981).

H2. There is a positive impact of living space on customers’ house purchase

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decision.

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2.1.3. Finance

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Thirdly, “financial” status is much significant to customer house choice (Hinkle and

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Combs, 1987, p.375; Kaynak & Stevenson, as cited in Sengul et al., 2010, p.220).

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The “financial” element of real estate requires access to a relative large amount of

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“capital” and as well as “borrowing costs” (Xiao & Tan, 2007, p. 865). In addition,

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“financial” status bases on combination of “house price”, “mortgage loans”,

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“income” and “payment term” (Opoku & Abdul-Muhmin, 2010; Yongzhou, 2009,

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p.17). Haddad et al. (2011) finds out the “economic” factor which is consisted of

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five variables, such as “income”, “interest rate”, “area”, “conversion” and “taxes”.

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Moreover, Adair et al.(1996, p.24) and Daly et al. (2003, p.306) group “interest
rate”, “maximum mortgage”, “maximum monthly payment”, and “length of time

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payment” into “financial” factor. Consequently,

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H3. There is a positive impact of financial status on customers’ house purchase

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decision.

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2.1.4. Distance

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Fourthly, one of the most important factors affecting individual “decision” making

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to buy a house is “location” factor (Kaynak & Stevenson, as cited in Sengul et al.,

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2010, p.219). The “residential location” has an influence on “people’s housing

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choice” (Zabel & Kiel, as cited in Opoku & Abdul-Muhmin, 2010, p.220). Distance

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to choose house can be affected by “width of adjacent” and “location to school”

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(Opoku & Abdul-Muhmin, 2010). Moreover, “distance to central business”,

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“distance to school” and “distance to work” are considered (Adair et al., 1996,

p.23). In addition, “access to recreational facilities” and “access to main roads” are

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proposed (Iman et al., 2012, p.30) . Hence,

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2.1.5. Environment

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H4. There is a positive impact of distance on customers’ house purchase decision.


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Fifthly, “environment” including “neighborhood”, “area attractiveness”, “view”,

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“noise from around districts” and “general security” is stated as one of the

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determinants of a household’s residential decision (Adair, 1996, p.23). It is

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confirmed that “environment” has a big influent to housing buyer (Tajima, as cited

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in Opoku & Abdul-Muhmin, 2010, p.224) and it is agreed by Morel et al. (2001,

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p.1119). Particluarly, “neighbourhood” quality is paid intention highly to house

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purchase decision making of customer (Gabriel & Rosenthal, 1989, p.240).

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Therefore,

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H5. There is a positive impact of local environment on customers’ house purchase

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2.1.6. Purchase decision

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decision.

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Customer behavior is an important research topic for recent decades. “There is also

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a clear shift from rational factors to psychological factors and to social decision

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factors” (Bargh, 2002). Beside, there is a link between the “intention to purchase” to

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“decision to purchase” of customers, especially the decision related to purchase real

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estate (Ajzen, 1991, p. 179; Han & Kim, 2010, p. 659; Kunshapn & Yiman, 2011,

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2.1.7. Demography

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p.7579).

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“Demographic” characteristics of customers are internal factors related to decision

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making (Mateja & Irena, 2009). “Demographic” characteristics consist of the

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individuals in term of “gender, age, educational status, marital status, career, the

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quantity of family members and children, as well as the residence property”.

“Demographic” characteristics consist of age (Yalch & Spangenberg, 1990),

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house (Sengul et al., 2010, p.214). It is also confirmed that there is a significant

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Particularly, “gender” has significantly influence on the financial feature of the

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et al., 2007) which are factors influenced on the “purchase intention” of customer.

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education (Gattiker et al., 2000), income level (Dawson et al., 1990), gender (Zhang

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difference in real estate buying decisions to “age” and “gender”, and not to

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“educational levels” and “marital status” (Haddad et al., 2011). Correspondingly, in

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this study, “gender” and “age” characteristics are considered as control variables so

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that investigate whether effect of those demography variables on housing purchase

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decision making of customers or not.

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CONCEPTUAL FRAMEWORK

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2.2.

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A conceptual framework which is proposed to show the relationship between five

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independent variables consisting of “feature”, “living space”, “financial status”,

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“distance” and “environment” and one dependent variable, namely “house purchase

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decision”. It also shows the effecting of demography including “gender”, “age”,

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“marital status”, “income” and “education” as control variables on the dependent

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variable. The conceptual framework is shown as the model (see Figure 2.1).

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FEATURE

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LIVING SPACE

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HOUSE
PURCHASE

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FINANCIAL
STATUS

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DECISION

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DISTANCE

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Control
- Gender

- Marital
- Income
- Education
- Career

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Figure 2.1: Conceptual framework

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- Age

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ENVIRONMENT


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CHAPTER 3. RESEARCH METHODOLOGY

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This chapter showed all steps of the research process, the minimum sample size,

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measurement scale, main survey and data analysis method.

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RESEARCH PROCESS

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3.1.

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The research process was summarized as following steps.

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Step 1: Define the research problems, research questions and research purposes.

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Step 2: Review the literature background from the previous research, then a

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conceptual model was set up and hypotheses were proposed.

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Step 3: Made and revise the draft questionnaire.

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A draft questionnaire with the measurement scales based on the previous research

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was set up. Next, the draft questionnaire was delivered to 02 real estate

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professionals, 03 management officers to respond, and a discussion about the draft

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clear the measure scale.

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questionnaire was carried out later. The aim of the pilot phase was to modify and

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After that, the revised questionnaires were delivered to another small group of 15

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survey was conducted with 263 receivers.

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persons to test about clear understanding of the questionnaire. Finally, a main

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Step 4: Conduct the main survey and collect data within 4 weeks.

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The questionnaires were directly sent to 263 persons. The main respondents were

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postgraduates of master programs or students who have been studying to get the

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second business certification in the University of Economic. Besides, a small group

about 24 persons with a wide variety of careers was also delivered questionnaires at

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data.

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Step 5: Edit, code and adjust missing data before testing reliable and validity of

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feedbacks, but 230 cases were available only.

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a book coffee in Ho Chi Minh City. Finally, there were 239 respondents giving their


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In order to prepare the data to analysis, data were edited, coded and adjusted for

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missing data. Next, reliability of measuring instrument was analyzed by calculation

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Cronbach’s alpha which was required above .7 (Hair et al., 2010). In addition,

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validity of measuring instrument was evaluated due to define the number extracted

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factors based on the Eigenvalue value over than 1 and changing of the slope in the

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Scree plot (Hair et al., 1998; Tabachnick & Fidell, 2001).

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Step 6: Test the hypotheses of research and define relationship of factors in model

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through the Multiple linear regression analysis.

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The Multiple linear regression analysis was applied to evaluate the relationship

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between five independent variables, including “feature”, “living space”, “finance”,

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“distance” and “environment” and one dependent variable, namely “decision”.

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Moreover, defining whether there was any significant contributory of control

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variables consisting of “gender”, “age”, “marital”, “income”, “education” and

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“career” on customers’ housing purchase decision was also analyzed by the multiple
linear regression. All steps were illustrated by the following Figure 3.1.

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Research Problems

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Theoretical Framework

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- Variables identified & labeled

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- Hypotheses generated

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Research Proposal

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Research Design

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Type, purpose, time frame, scope, environment
Sampling
Design

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Data Collection
Design

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Instrument Development

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Figure 3.1: Research

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Pilot testing

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Data Collection & Preparation

process

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- Research questions answered?

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- Hypotheses substantiated?

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Deduction

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Data Analysis & Interpretation

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Report Presentation

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Report Writing


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SAMPLE SIZE

3.2.

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The reliable and validity of variables were tested by using Cronbach’s Alpha and

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EFA, after that the multiple regression was applied to test model and hypotheses.

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First of all, the sample size was required to have enough quantity for the analysis.

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The minimum sample size was 100 and not less than five times of items (Hair et al.

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2010), thus:

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n > 100 and n = 5k (where k is the number of items).

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Thus, the minimum sample size was 5x34 = 170 samples.

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In addition, based on five independent factors of the conceptual model, the multiple

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regression analysis required sample size at least (Tabachnick & Fidell, 2007):

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50 + (8xm) = 50 + (80x5) = 90 samples.

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Where m: is the number of independent factors of the model.

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Consequently, the minimum sample size should be 170. Based on the actual

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collection data, the quantity of available respondents from the questionnaire survey

MEASUREMENT SCALE

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3.3.

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estimated 230, so that samples met the requirements above.

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3.3.1. Measurement scale

In order to operate concepts, it was necessary to measure them in some manners, so

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different variables were required to choose an appropriate scale. The independent

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variables were applied interval scale with five - point of Likert scale consisting of

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totally unimportant (1), unimportant (2), neutral (3), important (4), very important

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(5); beside, the dependent variable was applied the same measure consisting of
strongly disagree (1), disagree (2), neutral (3), agree (4) and strongly agree (5).

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pilot test was carried out with a small group consisting of two real estate

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In order to test logistics of the questionnaires prior collection data on large cover, a

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3.3.2. Pilot test


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professionals of Sacomreal and three management officers of Hoa Binh

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Corporation. All of them had much knowledge and many experience years in the

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real estate field.

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Firstly, the aim of the pilot test was explained to all of them; moreover, the

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questionnaires and relative documents were also sent to them. After that, a

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discussion with them was conducted to define which parts would be deleted or

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which parts would be added. The results were presented in Appendix 01.

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For items of the “house feature” factor, the item “type of finishing” and “quality of

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finishing” should be deleted because their content was inside the content of

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“construction quality”.

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While all items of “private living size” factor were agreed, the item “tax” of

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“Finance” factor should be changed into “the registration fee”.

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For “distance” factors, the “house on a main bus route” item should be deleted

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because this item was not paid attention by customers. The “distance from the house

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to shopping centre” item was also proposed to delete because it was too specific and

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related to female only. In addition, the group recommended that customers had got

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should be removed.

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tendency to ignore the “location away from industrial areas” item so this item

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For “environment” factor, its “the attractiveness of the area” item had got the same

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meaning of “view” item, so “the attractiveness of the area” should be deleted.

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will make my effort to buy a new house”.

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The last “decision” factor, it should change “I will want to buy a new house” into “I

Finally, after adjusting the first questionnaire table, a small sample size of fifteen

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meaning of questionnaires quite well and knew the way to answer, so the

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parts of its unclear to understand or misunderstand. However all of them understood

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convenient colleagues was delivered the questionnaires to recognize whether any