Factors affecting apartment purchase decision and satisfaction level of customers an empirical study of residential housing market in ho chi minh city, viet nam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Dong Manh Hung

FACTORS AFFECTING APARTMENT
PURCHASE DECISION AND SATISFACTION
LEVEL OF CUSTOMERS: AN EMPIRICAL
STUDY OF RESIDENTIAL HOUSING MARKET
IN HO CHI MINH CITY, VIETNAM.

MASTER OF BUSINESS (Honours)

Ho Chi Minh City-Year 2016


ACKNOWLEDGEMENT
Firstly, I would like to express my gratefulness to my supervisor Dr. Dinh Thai Hoang
for his professional guidance, intensive support, valuable suggestions, instructions and
encouragement during the time of doing my research.
I would like to express my deepest gratitude to Dr. Tran Ha Minh Quan, Dr. Nguyen
Dinh Tho, and other professors in the committee for their valuable time as the members of the
thesis examination committee. Their comments and meaningful suggestions were contributed
significantly for my completion of this research.
My sincere thanks are given to all of my teachers at International Business School –
University of Economics of Ho Chi Minh City for their teaching and guidance during
my master course.


UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business
------------------------------

Dong Manh Hung

FACTORS AFFECTING APARTMENT
PURCHASE DECISION AND SATISFACTION
LEVEL OF CUSTOMERS: AN EMPIRICAL
STUDY OF RESIDENTIAL HOUSING MARKET
IN HO CHI MINH CITY, VIETNAM.

ID: 22130027
MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. Dinh Thai Hoang

Ho Chi Minh City-Year 2016


ABSTRACT
In the real estate industry, purchasing an apartment is one of the most significant
economic decisions that people make, and it requires the purchaser to gather a lot of information
regarding its features. In reality, a real estate product as an apartment is both a financial asset and
a physical attributes comprising of its intrinsic attributes, extrinsic attributes and other factors
that connect it to customer behavioral research and satisfaction level. Therefore, better
knowledge of the factors influencing purchasers’ behavior will help apartment developers to
have better understanding and prediction of purchase decision making in real estate markets. In
an effort to provide a better understanding of purchasing behavioral decision making context and
influences to all apartment participants which are the developers, purchasers, and real estate
agents, this study examined the relationships of these factors: apartment attributes, financial
status, apartment service quality, purchasing decision making and customer’s satisfaction level

of 214 respondents who have apartment purchasing transactions in real estate industry in the Ho
Chi Minh City with an expectation of strengthening evidence in Vietnam. Employing the CFA &
SEM analyses, the research findings indicated that there were the positive relationships among
apartment attributes, financial status, apartment service quality, purchasing decision and
customer’s satisfaction level. The study also points out useful practical and managerial
implications, which support the real estate companies to have the marketing and sales strategies
impacting greatly on customer purchase decision and help policy makers to use suitable policies
to develop the Vietnam real estate industry.
Key words: Real estate industry, apartment attributes, financial status, apartment service
quality, customer purchasing decision, customer satisfaction level, real estate organizations,
HCM city.


CONTENTS
ACKNOWLEDGEMENT
ABSTRACT
ABBREVIATION
Chapter 1: INTRODUCTION…………………………………………………………………..1
1.1

Background to the research and research problem........................................................... 1

1.2

Research objectives .......................................................................................................... 4

1.3

Research methodology and research scope ...................................................................... 5

1.4

Research significance ....................................................................................................... 5

1.5

Research structure ............................................................................................................ 6

Chapter 2: LITERATURE REVIEW ......................................................................................... 7
2.1

Apartment purchase decision ........................................................................................... 7

2.2

Apartment attributes and apartment purchasing decision ................................................ 9

2.3

Financial status and apartment purchasing decision ...................................................... 11

2.4

Apartment service quality and apartment purchasing decision ...................................... 13

2.5

Apartment attributes and customer satisfaction level .................................................... 15

2.6

Apartment service quality and customer’s satisfaction level ......................................... 16

2.7

Conceptual model ........................................................................................................... 18

Chapter 3: METHODOLOGY .................................................................................................. 20
3.1

Research design .............................................................................................................. 20

3.1.1

Research process ..................................................................................................... 20

3.1.2

Measurement scales ................................................................................................ 22

3.2

Quantitative study .......................................................................................................... 26

3.2.1

Sample..................................................................................................................... 26

3.2.2

Data analysis procedures......................................................................................... 27

Chapter 4: DATA ANALYSIS .................................................................................................. 29
4.1

Respondents’ demographics ........................................................................................... 29

4.2.1

CFA for the first-order constructs ........................................................................... 32

4.2.2

CFA for second-order constructs ............................................................................ 37

4.2.3

CFA for the final measurement model.................................................................... 40

4.3

Structural equation modeling (SEM) ............................................................................. 45


LIST OF FIGURES
Figure 2.1. Purchase decisions (Zeng, 2013)…………………………………… .......................... 8
Figure 2.2 Conceptual model ........................................................................................................ 18
Figure 3.1 Research process.................................................................................................. 21
Figure 4.1 CFA model of financial status .............................................................................. 32
Figure 4.2 CFA model of service quality ............................................................................... 34

Figure 4.3 CFA model of purchasing decision ....................................................................... 34
Figure 4.4 CFA model of satisfaction level ............................ Error! Bookmark not defined.
Figure 4.5 CFA model of Apartment Attributes ..................................................................... 38
Figure 4.6 Final measurement model ..................................................................................... 44
Figure 4.7 Structural results (standardized estimates) ............................................................. 46
LIST OF TABLES
Table 3.1 Source of data collection............................................................................................... 26
Table 4.1 Respondents’ characteristics ......................................................................................... 30
Table 4.2 The first run of CFA (of financial status, service quality, purchasing decision and
satisfaction level) .......................................................................................................................... 33
Table 4.3 Summarized of CR, AVE and Cronbach’α (first order constructs) .............................. 36
Table 4.4 The first run of CFA of Apartment Attributes .............................................................. 37
Table 4.5 Summarized of CR, AVE and Cronbach’α (Apartment Attributes) ............................. 39
Table 4.6 Correlation (of Apartment Attributes) .......................................................................... 40
Table 4.7 Summarized of CR, AVE and Cronbach’α (final model)............................................. 40
Table 4.8 CFA Summary of eliminated item ................................................................................ 42
Table 4.9 Correlations (final measurement model) ...................................................................... 43
Table 4.10 Unstandardized structural paths .................................................................................. 45
Table 4.11 Regression Weights (bootstrap standard errors) ......................................................... 47


4.4

Bootstrap method ........................................................................................................... 47

4.5

Discussion ...................................................................................................................... 47

Chapter 5: CONCLUSION, IMPLICATIONS, AND LIMITATION................................... 51

5.1

Managerial implications ................................................................................................. 52

5.2

Limitations and future research ...................................................................................... 55

REFERENCES............................................................................................................................ 56
APPENDICES ............................................................................................................................. 61


LIST OF APPENDICES
Appendix A List of in-depth interviews’ participants ................................................................. 61
Appendix B Qualitative in-depth interview ................................................................................. 61
Appendix C Qualitative in-depth interview findings ................................................................... 64
Appendix D Questionnaire (English Version) ............................................................................. 70
Appendix F Correlations among components of apartment attributes, financial status, service
quality, purchasing decision and satisfaction level ...................................................................... 76
Appendix G Final measurement scales ........................................................................................ 77


ABBREVIATION
AVE

Averaged variance extracted

CFA

Confirmatory Factor Analysis

CR

Composite reliability

ExtrinA

Extrinsic attributes

EnvirA

Environment attributes

FinanSta

Financial status

IntrinsA

Intrinsic attributes

LocA

Location attributes

HCM

Ho Chi Minh City

PurchasD or PurchaseDecision

Purchase decision

SatisfLev

Satisfaction level

SEM

Structural equation modeling

SerQua

Service quality

SPSS

Statistical Package for the Social Sciences


Chapter 1: INTRODUCTION
1.1 Background to the research and research problem
Vietnam’s economy has been growing rapidly since the late 1990s when significant
economic reformed and the country’s Open Door Policy were implemented. Vietnam’s growth
rate is on average 6.4% in the last decade (The World Bank, 2015). Following these changes,
Vietnam’s residential housing industry also experienced fast development and expansion.
However, Vietnam population was nearly 91 million people in 2014 and the population increased
by 1.06 percent annually (The World Bank, 2015). Additionally, the urbanization rate in
Vietnam is also increasing at 3.3 percent annually and 33.1 percent of the population is living in
urban areas (Thanh Nien News, 2014). In most of the big cities in Vietnam, particularly in Ho

Chi Minh City, the business center of Vietnam, has around 7.9 million people in 2014 and the
urbanization to its suburbs is quite fast. Thus, the increasing in population and rapid urbanization
in the developing countries like Vietnam create the house or apartment shortage at critical levels
(Morel, Mesbah, Oggero & Walker, 2001). Moreover, an increasing house or apartment demand
often surplus the pace of its supply (Zang, as cited in Phan, 2012). As a result, the demand for a
house or an apartment is the urgent demand for each individual and households.
The real estate market in Vietnam has been significantly fluctuating since 1990. It might
be seen as three times fever and declining prices in the two decades (Phan, 2012). After the
economic depression in the period of 2012-2013, the real estate market has been shown signs of
recovery. The successful real estate transactions in Hanoi in 2014 are 11,450 transactions (up by
more than 2 times compared to 2013) and in HCM City are 10,350 transactions (up 30%
compared with 2013) (Manh Tung, 2014). In general, Vietnam real estate market has taken
advantages of population increasing and rapid urbanization which created a huge house or

1


their making decision behavior in purchasing an apartment. Bettman, Luce & Payne (1998)
emphasizes that customer choices are the process of selection, consumption, and disposal of any
products and services which can often be difficult and are important to the consumer, to
marketer, and to policy makers. He also states that “customer decision making is one of the most
important areas of customer behavior and it requires gathering a lot of regarding information” (p.
187). Thus, having the information of customer decision making will help the real estate
companies to have the marketing strategies impacting greatly on customer mind. This is one of
the keys in the success of any businesses.
In the recent decades, the concept of real estate purchase decision has been further
developing in various articles and literature on managerial disciplines; thus, prompting more real
estate developers use suitable reactions on their customer’s buying decision to achieve the home
sales targets and customer’s satisfaction (Piron, 1993; Spetic, Kozak & Cohen, 2005). Kupke (as
cited in Abdullah, Nor, Bazlin, Jumadi & Arshad, 2012) identifies real estate purchase decision

as one of the biggest decision in one’s life and it would change that person’s life as the process
involves a long time commitment. Basing on the real estate’s special characteristics, an
apartment purchasing decision defines itself as a unique behavioral process which is different
from other normal business purchasing decisions; and understanding how the purchasers behave
is quite valuable for better suppliers’ reactions (Kinnard, as cited in Phan, 2012).
Moreover, the national and cultural characteristics play a very significant role in house
purchase decision, that mean finding which is applied in specific context may not extend to
another context (Opoku & Abdul-Muhmin, 2010). Vietnam market – transitional market has very
specific cultural characteristics. Vietnam is considered a collectivist culture (Hofstede, as cited in
Swierczek & Thai, 2003). People relationships prevail over important decision, where everyone

3


apartment demand, but nevertheless it still faces many difficulties. The large real estate
outstanding loans and a big number of inventories created a serious crisis (Xuan Than, 2014),
particularly the apartment inventories and land inventories. The apartment current inventories
are roughly equivalent to 26.000 billion VND and land inventories are roughly equivalent to
28,500 billion VND (Manh Tung, 2014).
There are amended land laws and VND 30 trillion credit package to home buyers in an
effort of Vietnamese government to rescue the real estate market. As a result of those efforts,
Vietnam’s residential housing market is experiencing a recovery period. This trend is in line with
the efforts of Vietnamese government which are trying to renovate real estate industry in
Vietnam. However, there are still ongoing challenges for the economy (CBRE Vietnam, 2014).
Up to 2014, Vietnam has 92.690 billions VND real estate inventories; 19.210 unsold apartments
(7.520 in HCM City); 13.516 unsold low buildings (755 in HCM City) (CBRE Vietnam, 2014).
Trinh Dinh Dung (as cited in Nguoi Dua Tin News, 2014) states that only government’s effort is
not adequate for rescuing Vietnam’s real estate market. One of the key reasons of this crisis is
the real estate market supply does not meet customers’ demands as the house or apartment
builders lack correct information of their customers of choice and real estate market conditions

(Trinh Dinh Dung, as cited in Nguoi Dua Tin News, 2014). To survive and develop in this tough
market, marketers and analysts of this industry are required to have an in-depth understanding of
home or apartment purchaser’s decision criteria (Ratchatakulpat, Miller & Marchant, 2009) and
their satisfaction levels regarding housing attributes and service quality (Torbica & Stroh, 2001).
The problem regarding the lack of correct information of their customers of choice and
real estate market conditions encourages the real estate companies to focus on the need of
understanding their customers. There is an issue of how to know deeply the customer insight and

2


cares, supports, and takes responsibility for members of their family and acquaintances.
Vietnamese purchasers always consult with their colleagues and/or seniors, family members
before reaching an agreement or a decision (McKinney, 2000). Therefore, apartment’s
developers in Vietnam should give a special examination on consumer apartment-purchasing
behavior from the consumers’ perspective to deeply understand their customers.
Up to present time, the numerous studies have been undertaken about the perceptions of
apartment purchasers in terms of the apartment attributes, financial status, service quality,
purchasing decision and customer satisfaction level in other countries (Haddad, Judeh, Haddad,
2011; Zeng, 2013; Opoku & Abdul-Muhmin, 2010). However, these studies restricted
themselves to identify these concepts separately. In addition, very few scholars do the research
about this issue in Vietnam - a collectivist culture in making important purchasing decision. To
the best of the author’s knowledge, the study of Phan (2012) to investigate the key factors
affecting the house purchase decision of customers in Vietnam. This study, however, focuses
only on the house attributes’ effects on purchase intention, not on customer apartmentpurchasing behavior and their satisfaction level. Thus, this research aims to investigate how
apartment purchasers make purchase decisions basing on their satisfaction level about apartment
attributes and service quality of apartment developers in real estate industry in HCM City.
1.2 Research objectives
The overall objective of this study is to examine the role of the factors such as apartment
attributes, financial status, service quality that effect on apartment purchase decision and

satisfaction level of customers who have apartment transactions in the real estate industry in Ho
Chi Minh City, Vietnam. Specifically, it investigates:
-

The relationship between apartment attributes and apartment purchasing decision;

4


-

The relationship between financial status and apartment purchasing decision;

-

The relationship between apartment developers’ service quality and apartment purchasing
decision;

-

The relationship between apartment attributes and satisfaction level.

-

The relationship between apartment developers’ service quality and satisfaction level.

1.3 Research methodology and research scope
In this research, two phases of study were undertaken: a qualitative study and a
quantitative study. The questionnaire was translated from English into Vietnamese. Through
qualitative study, in-depth interviews with six people were conducted in order to adjust the items

closing to features of Vietnamese cultures and to make the improvement for the official
questionnaire. In the quantitative study, the author collected data by using a convenience
sampling approach and employed self-administered survey. For analyzing the collected data,
SPSS 16 and Amos 22 were used to test the model. For the reliability and validity, the researcher
used CFA. Then, SEM was used to test the hypothesized model.
Due to the limitation of time, this research is therefore limited to Vietnamese customers
who have apartment purchasing transactions in real estate industry in the Ho Chi Minh City;
since it is one of the biggest cities in Vietnam and most of real estate companies centralize here.
1.4 Research significance
Based on the research results, some useful managerial implications were suggested to
help the real estate companies to have the marketing and sales strategies impacting greatly on
customer purchase decision and help policy makers to use suitable policies to develop the
Vietnam real estate industry.

5


1.5 Research structure
This thesis is organized into five chapters. The introduction chapter presents background
of the research, research problem, and research objectives. Besides, the significance that this
thesis contributes to management practice as well as scope of the research and methodology of
data analysis are also mentioned in the first chapter. The following chapter reviews and
synthesizes the theories in the literature of research’s concepts, including apartment purchase
decision, and its relationships with apartment attributes, financial status, service quality and
customers’ satisfaction level. This chapter also describes the conceptual model and hypotheses.
The third chapter mentions about research methodology used to empirically test the research
model. Chapter four presents the results of data analysis and analyzes them for their relevance to
the research questions or hypotheses. The last chapter is organized to conclude about research
hypotheses, research problems. It also suggests implications for theories, implications for
policies and practices based on the findings; and points out some limitations for further research.

6


Chapter 2: LITERATURE REVIEW
This chapter mainly introduces the theories, which are proposed by many scholars in
academic field and are related to all the concepts and research model. The author firstly clarifies
the definitions of purchase decision and then the relationships among purchase decision with
apartment attributes, financial status, service quality and customers’ satisfaction level conducted
by previous studies are also discussed for proposing a conceptual model and hypotheses.
2.1 Apartment purchasing decision
Purchase decision is a stage of customer purchasing behavior carried out over the course
of a set period of time (Piron, 1993; Kotler & Keller, 2009). The customer purchase behavior has
recently gained much attention from marketers and researchers because of the significant role it
plays in anticipating operational success and achieving sustainable competitive advantage
(Parasuraman, Zeithaml & Berry, 1985). The researches in this field and the experiences of
successful marketers give evidences to understand how customers decide to purchase and where
to purchase products. Figure 2.1 shows the purchase decision-making process and indicates the
customer’s purchasing behavior experiences in each stage of that decision making process (Zeng,
2013). Generally, the process of selecting a specific product to purchase involves several
comparisons to match customer characteristics and purchase characteristics of that product.
Therefore, customer individually may adapt different criteria to evaluate which product can best
meet their need based on the type of purchase and how consumers anticipate each will perform
according to the various criteria (Blackwell, Roger, Miniard, Paul, Engel & James, as cited in
Zeng, 2013).
Although there are five stages of purchasing decision process: need recognition,
information search, evaluation of alternatives, purchase, post-purchase evaluation, some of

7

customers do not always go through all the steps involved from the need concept to competitive
supplier to specific shop choice; their past experiences and their preferred brand sometimes
enable consumers to make a choice immediately (Blackwell et al., as cited in Phan, 2012). In
addition, consumers in different market segments might make different purchase decisions based
on their perceptions of the attributes they consider important (Kotler & Keller, 2009).

Figure 2.1. Purchase decisions (Zeng, 2013)

Purchasing an apartment is one of the most significant economic decisions that people
make, and it requires the purchaser to gather a lot of information regarding its features (Haddad,

8


Judeh & Haddad, 2011). In reality, real estate is both a financial asset and a physical attributes
comprising of its intrinsic attributes, extrinsic attributes and other factors that connect it to
customer behavioral research (Anastasia & Suwitro, 2015). With this view, the apartment
purchase decisions are different from other business decisions due to “the innate, durable and
long-term characteristics of real estate” (Kinnard, as cited in Phan, 2012, p.1). It is a highly
differentiated product with “each specific site unique and fixed in location” (Kinnard, as cited in
Phan, 2012, p.1). Therefore, better knowledge of the factors influencing purchasers’ behavior
will help apartment developers to have better understanding and prediction of purchase decision
making in real estate markets (Daly, Gronow, Jenkins & Plimmer, as cited in Anastasia &
Suwitro, 2015).
There are various customer decision-making models have been proposed in the literature
in recent decades. However, many researchers believe that a specific, situation and productoriented model is needed in studying purchasing (Erasmusm, Boshoff & Rousseau, as cited in
Koklic & Vida, 2009). They also admit that there are lacks studies of purchasing decisions that
consumers are most concerned about “behavioral purchasing decision making”. Additionally, the
studies about real estate purchasing behavioral decisions in Vietnam are not yet to be found in

public literatures. Thus, this study will provide a better understanding of purchasing behavioral
decision making context and influences to all apartment participants which are the developers,
purchasers, and real estate agents.
2.2 Apartment attributes and apartment purchasing decision
The abundance of apartment developers provides several choices for apartment customers
to consider, but they can not make a purchase decision if there are no criteria to help them to
evaluate. That is why the study of Hawkins, Mothersbaugh and Best (2011) mentions that the

9


apartment features or its attributes which are similar to customers’ expectations are the typical
criteria to help them to value their choices. In general, apartment customers seem to evaluate the
main attributes of the apartment which they perceive as the most valuable, value these different
attributes, and then assess their willingness to pay for these desirable attributes (Kotler & Keller,
2009). There are several real estate attributes have been researched in many previous studies as
affecting factors on apartment customers’ purchasing decision making (Ratchatakulpat et al.,
2009; Haddad et al., 2011; Opoku & Abdul-Muhmin, 2010; Alonso, 2002; Pope, 2008; Spetic et
al., 2005; Wang & Li, 2006). Basing on the researches, Zeng (2013) and Ratchatakulpat et al.
(2009) identify the main housing attributes into four categories: intrinsic housing attributes,
extrinsic housing attributes, environment attributes, and location attributes. Firstly, intrinsic
housing attributes include housing size, housing type, internal house design and so on (Cupchik,
Ritterfeld & Levin, as cited in Zeng, 2013, & Ratchatakulpat et al., 2009). Secondly, extrinsic
attributes include: exterior design and exterior space (Bhatti & Church, as cited in Zeng, 2013 &
Ratchatakulpat et al., 2009). Environmental attributes depict themselves things as neighborhood
(Cheshire & Sheppard; Fierro, Fullerton & Donjuan-Callejo; Pasha & Butt, as cited in Zeng,
2013, & Ratchatakulpat et al., 2009) and pollution (Yusuf & Resosudarmo; Zabel & Kiel, as
cited in Zeng, 2013). Location attributes comprise of the distance to the nearest central business
district, schools, and transport (Chay & Greenstone; Pasha & Butt; Pope & Jaren, as cited in
Zeng, 2013, & Ratchatakulpat et al., 2009). As many researchers in these studies use Rosen’s

hedonic model (1974) to examine customers’ preferences for housing structural amenities and
attributes and the residential apartment is investigated as a special product which is valued for its
utility-bearing attributes or characteristics or other housing purchase factors (Bitter, Mulligan, &
Dall'erba, 2007; Taylor, 2008; Fierro et al., 2009). The potential home buyers firstly identify the

10


major attributes and benefits which are similar to their expectations, and then value the
importance of each attribute and benefit. After valuing which attributes will deliver the most
perceived value for them, they prefer to pay money for these most valuable attributes (Bao &
Wan, 2007; Farmer & Lipscomb, 2010; Sunding & Swoboda, 2010).
In summary, it is indicated that many attributes of residential houses presented can have
director indirect, positive or negative impacts on consumers’ housing purchase choice decisions
(Alonso, 2002; Opoku & Abdul-Muhmin, 2010; Spetic et al., 2005; Wang & Li, 2006).
However, the researchers also realize that the relative importance of various housing attributes
might vary across national contexts. Hence, based on the literatures, it is hypothesized:
H1. Customer’s residential apartment purchasing decision in Vietnam is positively influenced
by apartment attributes.
2.3 Financial status and apartment purchasing decision
Purchasing an apartment is considered as “the biggest financial decision in one’s life”
and would affect the household’s budget as the process involves a long time commitment starting
from the very first down payment to the monthly payment in the future (Abdullah et al., 2012,
p.1). Thus, financial status is an important influencing factor to apartment’s customer to
considering. Xiao and Tan (2007) state that if the apartment customers know their current
financial situation, will helps ensure them buy an apartment they can comfortably afford. These
researchers also divide financial status into “financial” element of real estate which requires an
access to a relative large amount of “capital” and as well as “borrowing costs” (Xiao & Tan,
2007, p. 865). It means that financial status is not only in term of money or capital, but it is also
the costs to use for purchasing an apartment. Additionally, financial status comprises “house

price”, “mortgage loans”, “income” and “payment term” (Opoku & Abdul-Muhmin, 2010; Hou,

11


2009). Adair, Berry and McGreal (1996) and Daly et al. (2003) clarify that financial factor for
purchasing an apartment should be measured further than “house price” owning to the
apartment’s special characteristics and its transactions in term of payment. They further add
“interest rate”, “maximum mortgage”, “maximum monthly payment”, and “length of time
payment” into financial status. The apartment purchasers now have diversified attitudes, strong
bargaining power, extensive alternatives of available choices, and lower switching costs. As a
result, they are very critical and sensitive to take purchase decisions from an apartment’s prices
and transaction paying methods (Opoku & Abdul-Muhmin, 2010).
In investigating customers’ apartment selection criteria, several studies have adopted the
hedonic price model created by Rosen (as cited in Taylor, 2008) which is employed by
numerous organizations to study the demand for housing amenities and attributes (Taylor, 2008;
Fierro et al., 2009). The similarity of these researches is that customers seem to purchase their
houses by equating the marginal utility of each house attribute to its marginal price (Rosen, as
cited in Zeng, 2013). Therefore, an apartment should be considered as a product which is valued
for its utility-bearing attributes or characteristics or other apartment purchasing factors.
However, purchasing an apartment will not be an easy decision because it will strongly affect
the household’s budget. Paying a big amount of money at once for an apartment seems to be
impossible for most of young family in developing countries (Xiao & Tan, 2007). In order to
perfectly match the customer’s needs, the willingness to pay, the ability to pay, and apartment
developer’s price expectations, the apartment’s equilibrium price should be focused more on
terms of payment (Sunding & Swoboda, 2010). The comparisons of apartment purchasers then
will be used to evaluate the costs of purchasing an apartment and the costs of renting it to have
the better choice. Ratchatakulpat et al. (2009) realize if a purchaser evaluates the costs to use

12

capital to purchase is cheap and easy to achieve, he or she will shift from renting to purchasing
an apartment. Intelligent customers are assumed to be utility maximizing, within the bounds of
search costs and limited knowledge, mobility, and income (Kotler & Keller, 2009). They
estimate which offer will deliver the most perceived value and make purchase decisions based
on their estimate (Hawkins et al.; Solomon, as cited in Zeng, 2013). So, this study is going to
examine both apartment attributes’ costs and paying methods can create more perceived value to
stimulate customers’ willingness to pay to purchase an apartment. Given this diversifying
results, the current study proposes and tests the second hypothesis:
H2. The customer’s apartment purchasing decision is positively influenced by customer’s
financial status.
2.4 Apartment service quality and apartment purchasing decision
Service quality has been recognized as a key factor which helps organizations to take
their advantages for increasing their business competiveness successfully. The concept of service
quality is firstly developed by Parasuraman et al. (1985) with five sub-constructs (reliability;
responsiveness; assurance; empathy; and tangibles) of service quality model which is
subsequently applied by several researchers during the development of the market disciplines
(Gannage, as cited in Nahmens & Ikuma, 2009; Kotler & Keller, 2009). Nahmens & Ikuma
(2009) state that apartment developers provide housing services to customers and customers
perceive these service processes in terms of interactions, activities and dynamic events in the
residential housing systems. In these processes customers search for information, customers will
evaluate and compare services from different residential housing suppliers, and select which
alternative they believe better. They conclude that an apartment purchasing decision can be
shifted or modified with the circumstances of the person and/or consumption situation derived

13


from the quality attributes of apartment developers. Thus, the quality of services provided by

apartment developers also has an influence on home buyers’ purchase decisions and postpurchase satisfaction (Torbica & Stroh, 2005; Forsythe, 2008; Nahmens & Ikuma, 2009).
In the developing residential housing service market, understanding what customers
are looking for, and how they will evaluate services is important. Housing customers need
service quality from service providers. Defining quality factors of an apartment will expand the
concept of perceived customer value of housing services and describe it as a source of
competitive advantage. The customers’ perceptions affect the way they value particular services
choose between different providers and evaluate service delivery (Schiffman, Hansen & Kanuk,
2012). Nahmens & Ikuma (2009) and Forsythe (2008) adopt the five main dimensions of service
quality to assess service quality in construction housing in US in order to analyze home buyers’
perceived service quality and find out whether the actually received service quality met or
exceeded home buyers’ expectations. Basing on their works, the five dimensions of SERQUAL
model are divided to 21 housing service quality attributes. These service quality items are used
to measure the quality of the services provided by apartment’s developers and how consumers
perceive service quality value during the design and construction process. Torbica and Stroh
(2001) and Nahmens & Ikuma (2009) investigate home buyers’ perceptions of service quality
and realize that the customers will strongly make a purchase decision if they feel satisfy with
the service quality in the US. Moreover, house buyers’ overall service quality satisfaction is
significantly influenced by all five dimensions (reliability, responsiveness, assurance, empathy,
and tangibles). Furthermore, Atterhog (2005) admits that residential house service providers
could increase customer satisfaction and purchase decision by effectively reducing the gaps
between customers’ service quality expectations and perceptions. This researcher has also

14


identified housing service quality as an antecedent of housing purchase decisions and has
revealed major service quality factors involved in the purchasing stages that have a significant
influence on consumers’ value perception and purchase decision in apartment purchasing
process setting. Therefore, based on the literatures, it is hypothesized:
H3. Consumer’s apartment purchasing decision is positively influenced by the service quality

provided by apartment developers.
2.5 Apartment attributes and customer satisfaction level
Customer satisfaction level is generally defined as being a function of customer
expectations and perceived performance, or of perceived product attributes’ quality (Oliver, as
cited in Zeng, 2013) and it is consequently a subjective evaluation of the degree to which the
customer’s expectations concerning a particular service encounter are met (Mossel & Valk, as
cited in Zeng, 2013). In customers’ satisfaction/dissatisfaction studies, these behaviors will have
been given attention where customers’ satisfaction refers to the difference between pre-purchase
expectations and perceptions of post-purchase (Peter & Olson, as cited in Nahmens & Ikuma,
2009). Dissatisfaction level occurs when product attributes’ performance is less than expected
and it is more likely to result in customers’ satisfaction when product attributes’ performance is
better than expected (Peter & Olson, as cited in Nahmens & Ikuma, 2009). Intuitively, it is
expected that the customers’ satisfaction level is the quality of customer comparison between
their expectations about an apartment and apartment attributes provided by real estate
developers.
Previous research has identified the relative importance of key dimensions of housing
attributes to overall customers’ satisfaction level (Nahmens & Ikuma, 2009) and in the context
of real estate industry. Longenecker et al. (as cited in Nahmens & Ikuma, 2009) state that

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customer satisfaction should be considered in post-purchase evaluation which includes a number
of antecedents such as housing attributes, performances and services. Customer expectations are
significantly influenced by the value received from an apartment and apartment services
provided by real estate developers. A number of research illustrate that the house buyer’s
overall satisfaction is based on the total housing attribute offering from housing developers
which meet consumers’ needs and wants (Torbica & Stroh, 2001; Forsythe, 2008). They find out
the more positive customers’ perceptions of housing attributes in real estate industry, the greater
the likelihood that overall home – purchasers’ satisfaction to be high. Similarly, Opoku & AbdulMuhmin (2010) realize that the following aspects of housing attributes can significantly

influence house buyers’ expectations of their new house: housing structure, housing sales dealer,
workmanship, housing construction, materials, price and appreciation value. As a result,
investigating the positive relationship between apartment attributes and apartment owners’ postpurchase satisfaction may help the marketers to provide the right housing products and services
to both potential home buyers and house owners who intend to buy a second house. Hence, the
fourth hypothesis is:
H4. The overall satisfaction level of consumers after the purchasing decision is positively
influenced by the evaluations of housing attributes.
2.6 Apartment service quality and customer’s satisfaction level
Basing on the literature of housing industry and service quality, study by Nahmens &
Ikuma (2009) reveals that there are some service quality determinants that can satisfy and
dissatisfy housing customers. The predominant satisfiers are attentiveness, responsiveness, care
and friendliness and the predominant dissatisfies are integrity, reliability, responsiveness,
availability, and functionality. Other work by Power and Associates (as cited in Nahmens &

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