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A Conjoint Analysis of Buyers¡¦ Preferences for Residential Property

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Author Info

  • Abdul Hamid Mar Iman

    ()
    (Associate Professor, Centre for Real Estate Studies, Universiti Teknologi Malaysia, PO Box 81310, Johor Bahru, Malaysia)

  • Fu Yek Pieng

    ()
    (Property Executive, Tebrau Teguh Berhad (8256-A), 81100 Johor Bahru, Malaysia)

  • Christopher Gan

    ()
    (Associate Professor, Faculty of Commerce, Department of Accounting, Finance and Economics, PO Box 84, Lincoln University, Christchurch, New Zealand)

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    Abstract

    This study evaluates the preferences of middle-high income earners for newly designed high-cost residential property attributes in their purchase decision, by using the conjoint method, whereby the buyers¡¦ ¡¥trade-offs¡¦ of different product attributes are measured. The fractional factorial design is used to create eighteen sets of product profiles based on a combination of the six most important attributes that determine the purchase decision of buyers. The preference rating of the respondents is then decomposed to yield part-worth utility for each attribute level. A regression analysis shows that the most pertinent attributes of high-cost residential properties trade-off by the respondents, are type of property, design and features, price, built-up area, location, and reputation of the developer. Together, these attribute explain about 74% of the buyers¡¦ expressed utility of the product purchased. By using a hold-out sample of respondents, a conjoint analysis has predicted the buyers¡¦ expressed utility with a reasonable level of accuracy.

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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 15 (2012)
    Issue (Month): 1 ()
    Pages: 73-105

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    Handle: RePEc:ire:issued:v:15:n:01:2012:p:73-105

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    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web page: http://www.asres.org/

    Order Information:
    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web: http://www.asres.org/

    Related research

    Keywords: Conjoint method; Residential; Consumer behaviour; Preference; Utility;

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    References

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    1. Bender, A. & Din, A. & Hoesli, M. & Brocher, S., 1999. "Environmental Preferences of Homeowners: Further Evidence using the AHP Method," Papers 99.10, Ecole des Hautes Etudes Commerciales, Universite de Geneve-.
    2. Dietrich Earnhart, 2001. "Combining Revealed and Stated Preference Methods to Value Environmental Amenities at Residential Locations," Land Economics, University of Wisconsin Press, vol. 77(1), pages 12-29.
    3. E Molin & H Oppewal & H Timmermans, 1999. "Group-based versus individual-based conjoint preference models of residential preferences: a comparative test," Environment and Planning A, Pion Ltd, London, vol. 31(11), pages 1935-1947, November.
    4. Olympia Bover & Mario Izquierdo, 2003. "Quality-adjusted prices: hedonic methods and implications for national accounts," Investigaciones Economicas, Fundación SEPI, vol. 27(2), pages 199-238, May.
    5. Green, Paul E & Srinivasan, V, 1978. " Conjoint Analysis in Consumer Research: Issues and Outlook," Journal of Consumer Research, University of Chicago Press, vol. 5(2), pages 103-23, Se.
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
    7. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
    8. Sayadi, Samir & Gonzalez Roa, M. Carmen & Calatrava Requena, Javier, 2005. "Ranking versus scale rating in conjoint analysis: Evaluating landscapes in mountainous regions in southeastern Spain," Ecological Economics, Elsevier, vol. 55(4), pages 539-550, December.
    9. AfDB AfDB, . "African Development Report 2004," African Development Report, African Development Bank, number 21 edited by Adeleke Oluwole Salami, 6.
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