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RESEARCH PROJECT
(BMBR5103) KEY FACTORS INFLUENCING ON
APARTMENT PURCHASE DECISION OF
CUSTOMERS IN HO CHI MINH CITY STUDENT ‘S FULL NAME : PHAM THI NGOC VAN
STUDENT ID : CGSVN00015047
INTAKE : MBAOUM0313
ADVISOR’S NAME & TITLE : A. Prof. PHAN DINH NGUYEN September 2014 i

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ADVISOR’S ASSESSMENT

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ABSTRACT
The speed of growing population in a recent decade together with the economic
development, the demand of housing is more and more increasing while the price of
ownership is big issue at Vietnam. Condominium is becoming the convenient living
model for people stay in big cities such as: Ha Noi, HCM and Da Nang where the
demand of living and working of immigration increasing. The beneficial view of
condominium is the residents can enjoy convenient facilities from their own
apartment to opening space with greenery system anywhere.
The demand of condominium in big cities is certain and especially at Ho Chi Minh
City where the research will pay attention real demand for middle income people.
The researcher will identify factors or determinants influence on the demand of
buying apartments at HCM City.
The study aims to identify the key factors affecting the decision of customers to buy
residential apartments in HCMC. For study purpose, a sample of 300 salaried class
persons was taken by using purposive sampling technique. The sample consisted of
those respondents who either bought an apartment or are planning to buy.
Respondents were asked to give their opinion about listed variables on Five-point
Likert Scale. By using Exploratory Factor Analysis, six factors were extracted
which explained 73.916 per cent of total variance.
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Contents
ADVISOR’S ASSESSMENT i

3.3.1. Measurement scale 19
3.3.2. Pilot test 19
3.4. MAIN SURVEY 22
3.5. DATA ANALYSIS METHOD 23
3.5.1. Reliability measure 23
3.5.2. Validity measure by EFA (Exploratory Factor Analysis) 23
3.5.3. Multiple regression analysis 24
CHAPTER 4. DATA ANALYSIS AND RESULTS 26
4.1. PREPARATION 26
4.1.1. Editing 26
4.1.2. Coding 26
4.2. DESCRIPTIVE DATA 29
4.3. ASSESSMENT MEASUREMENT SCALE 32
4.3.1. Cronbach’s Alpha 32
4.3.2. Exploratory Factor Analysis (EFA) 37
4.4. HYPOTHESES TESTING BY MULTIPLE REGRESSION 42
4.4.1. Checking assumption of Multiple Regression 42
4.4.2. Evaluating the model 43
4.4.3. Evaluating the independent of variables 43
4.4.4. Checking hypotheses of model 44
4.4.5. Analysis effect of control variables by Multiple Regression 46
CHAPTER 5. CONCLUSIONS AND IMPLICATIONS 47
5.1. RESEARCH OVERVIEW 47

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5.2. RESEARCH FINDINGS 47
5.3. MANAGERIAL IMPLICATION 48
5.4. RESEARCH LIMITATIONS & DIRECTIONS FOR FUTURE RESEARCH
HYPOTHESIS 49

Table 4.20: Coefficients of MLR including Marital_Render 85
Table 4.21: Coefficients of MLR including Education_Render 86

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Table 4.22: Coefficients of MLR including Age_Render 86
Table 4.23: Coefficients of MLR including Occupation_Render 87
Table 4.24: Coefficients of MLR including Income_Render 87

ix LIST OF FIGURE
Figure 2.1 : Research Model 15
Figure 3.1: Research process 18
Figure 4.1: Scree plot 78
Figure 4.2: Regression standardized residual 82
Figure 4.3: Normal P-P plot 83
Figure 4.4: Scatterplot 84
Ho Chi Minh City, the primary economic hub for Vietnam, had a population of around
7.9 million as at December 2013. Ho Chi Minh is a biggest city of Vietnam where
people choose to live, work and reside. Therefore, demand of housing is increasing
significant while the current price of house ownership is extremely high in spite of
critical declines in real estate in recent years. And choosing apartment to reside is
emerged as a practical need of people.
First, thank for the economic growth and rapid urbanization and demand of housing
spending has been increasingly drastic in recent years. In Vietnam, the residential
market in urban areas is expanding widely. Expanding urban land supply is critical for
cities in which Vietnam requires rapidly growing urban economies with supporting
infrastructure and physical structure
In 2013, the Vietnamese economy recorded an annual growth rate of 5.42 boasting an
average annual GDP growth rate of 6.7% over the last ten years. GDP growth in 2013
was 5.4% and is expected to rise to 5.6% in 2014. Grant Thornton (2014)

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GDP per capital of Vietnam has been growing steadily since 2000. GDP per capita has
improved steadily and in line with GDP growth since 2000. The graph below shows the
average national GDP; however, the actual GDP in cities such as Ho Chi Minh City
and Hanoi is significantly higher. (Grant Thornton, 2014)
Inflation in Vietnam averaged 7.33% from 1996 until 2013. While inflation peaked at
28.3% in August 2008, followed by inflation of 18.58% in 2011, the Vietnamese
government successfully controlled the inflation at 6.6% in 2013, the lowest rate in a
decade thanks to its monetary tightening policy. Grant Thornton (2014)
From positive signals of economic, the real estate has been started rebounding with
many projects deployed in which segment of apartment for residence is emerged
sharpen while the demand of people especially are young people is increasing.
This thesis examines housing preference of people live and work (especially urban
residents) in Ho Chi Minh City. According to the report of “Vietnam Housing Sector

In fact, the demand and the supply do not meet each other due to having some
undefined problems relating to buying decision of people as follow:
- In Vietnam, in spite of having basic legal framework for classifying apartments
of Department of Construction such as: regulatory and Decree 121/2013/CP (effective
from 30 November 2013, replaced for Decree 23/2009/CP) but in practice, definition
of apartments is usually stated unmethodical way by project ownership investor. These
investors seem to offer many kinds of apartment with multifarious names are labeled
as: middle cost apartment, high-class apartment, Penthouse apartment, … etc to launch
on the market with unreasonably ridiculous prices.
- There are many ambiguous concepts in definition of apartments in Vietnam and
also unclearly founded criteria to classify as well as assess apartment in HCM City as
particular.
- The price of apartment in HCM City is still high for majority of people. And
there are some roadblocks in bank loan to purchase apartment that people is facing.

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- The quality of apartment as well as infrastructure and facilities in HCM location
are big questions need to be concerned.
Some matters relating to legal procedure such as: certificate of apartment ownership,
term of ownership.
“There are two main fields of customer research are how customers go about making
decisions and how decisions should be made. In addition, “creating true value for
customer and customer notion focused approach” is confirmed (Edwards & Fasolo,
2001). It is found that “customer decision making is one of the most important areas of
customer behavior and it requires gathering a lot of regarding information” (Bettman et
al., 1998 & Simonson et al., 2001).
The real estate in Vietnam has got specific characteristics to which connected customer
demands closely. In recent years, researchers, domestic and foreign companies
attracted to real estate field in Vietnam with a number of research works.

customers’ demand and to have available strategies in the real estate field
1.4. RESEARCH QUESTIONS
Consequently, in the term of real estate purchase decision of customers, the research
questions of the thesis are raised as two following questions
Based on this situation, I would like to point out some problems to correspond to
questions stated as follow:
 What are main factors influencing on apartment purchase decision of customers
in HCMC. ?
 How is impact of these factors on apartment purchase decision of customers
evaluated in HCM context?
Understanding relationship between main factors affecting customer house purchase
decision is an important role for both real estate developers and enterprises to satisfy
customers’ demand and to have available strategies in the real estate field.

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1.5. SCOPE OF STUDY
The study scope should be surveyed in apartment segment at HCM City where is
considered a typical representative is given its population profile, excellent
demographic statistical data in general The research only focuses on key factors which
influence to demand of residential apartment.
Target respondents for this thesis should be people who are living and working in
HCMC.
1.6. METHODOLOGY
The real estate is a broad topic requires further deeply research with consuming
significant time and efforts. This thesis is relatively provided merely firsthand
information to assess real demand and determinants impact on residential apartment
buying decision.
Research methodology is an important part of the whole process of research to
determine how the research should be undertaken.

research model for this study.

Charter 3: Research Methodology. This chapter describes the research methodology
and to develop the process study, measurement scale, sampling plan and the method of
analysis and testing hypothesis.

Charter 4: Data analysis & Results. This chapter presents the result of research such as
statistical analysis and discussion.

Chapter 5: Conclusions & Implications. This chapter presents the main findings and
managerial implications. Besides, the limitations and further studies are also shown.
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CHAPTER 2. LITERATURE REVIEW
This chapter presents overview of previous literatures relating to apartment purchase
decision making of customers. Also, a conceptual framework is built up and relative
hypotheses of research are raised.
2.1. APARTMENT OVERVIEW
According to David R. Henderson, the concise of encyclopedia of economic (David,
2002), the law of demand is built almost the whole edifice of economics. The law of
demand states that when the price of a good rises, the amount demanded falls, and
when the price falls, the amount demanded rises. However, the real estate industry does
not always apply this law conclusively. The effective housing demand is the amount of
housing for which the population is willing and able to pay. The effective housing
demand for private housing is volatile and has been affected in the past by the market
supply and market allocation mechanism. There are many factors impact on demand
and decision of buyer of apartments such as: price, financing supports, household

bank and government. Credit constraints in the form of down payment requirements
significantly affect housing consumption for many buyers. Bank loans are usually
required by most households to finance their purchases. The credit or financial market
typically cannot lend on the basis of the borrower’s expected future income prospects.
Therefore, current income and current financial assets then become important
indicators of a borrower’s means of repaying a loan. The availability of housing loans
and government subsidies will influence consumers’ choice of whether or not to buy a
home (Omar and Ruddock, 2002). The demand for housing also depends on the
mortgage rates and the general level of consumer confidence (Tutor2u, 2003).
The study of RNCOS (Business Consultancy Services) on Vietnam Housing Sector
Forecast to 2015, one of issues relating to housing demand of Vietnamese is
affordability. The report studies the affordability scenario of Vietnam and found that
house price to household income ratio is much higher than the neighboring regions,
creating vast gap between house price and affordability.

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Young people live in big cities such as Ha Noi, Da Nang and HCM have great demand
of housing based on various experiences o life milestones (adulthood, education and
graduation stages, job seeking, and occupation path, leaving parental home, job
opportunities, marriage and children). These various experiences somehow influence
on demands of housing types, attributes and services associated into.
But the price of residential condominium in HCMC is still quite high and people tends
to purchase apartments depends on the level of disposable income (Bible&Hsieh
(2001); Brandy&Parsons (2002)). High level of disposable income will increase the
ability of spending and especially in purchase of housing is a major goal of most
people.
Firstly, price is one of important determinants of a household choice and buying
decision. However, unlike other consumption goods, the housing market is unique
because it manifests the characteristics of durability, heterogeneity, and spatial fixity.

made low income workers out of reach for new flats.
The city government increasingly seeks solutions to support middle income and low
income group could be affordable to buy apartment (SGGP, 2013). According to
HCMC Real Estate Association said many capable Vietnamese businesses have
channeled their capital into the luxury housing sector to satisfy demand of high income
groups, while affordable housing apartments for low-income people has fallen short.
The unbalanced supply of accommodation has now left a large unsold inventory.
2.2. LITERATURE REVIEW
2.2.1. Feature
One of important factors impact on buying decision of apartment is feature attribute
(Quiley, 2011) and (Sengul et al 2010) also confirmed that feature has significant
effects on customers’ house purchase decision making.

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The feature of apartment includes designs, apartment size, building quality are key
determinants to making decision of buying apartment (Adair et al., 1996; Daly et al.,
2003; Sengul et al., 2010, p.218; Opoku & Abdul-Muhmin, 2010)
H1. There is a positive impact of house features on customers’ house purchase
decision
2.2.2. Finance
Each of buying decision made is based on financial capacity and especially in
purchasing an apartment, financial attribute significant impact on customer behavior.
“Financial” status is much significant to customer house choice (Hinkle and Combs,
1987, p.375; Kaynak & Stevenson, as cited in Sengul et al., 2010, p.220). The
“financial” element of real estate requires access to a relative large amount of “capital”
and as well as “borrowing costs” (Xiao & Tan, 2007, p. 865). In addition, “financial”
status bases on combination of “house price”, “mortgage loans”, “income” and
“payment term” (Opoku & Abdul-Muhmin, 2010; Yongzhou, 2009, p.17). Haddad et
al. (2011) finds out the “economic” factor which is consisted of five variables, such as

2.2.5. Environment
Fifthly, “environment” including “Community / Neighborhood”, “Living space”,
“Apartment security 24/24”, “View”, “Private” and “Pollution” is stated as one of the
determinants of a household’s residential decision (Adair, 1996, p.23). It is confirmed
that “environment” has a big influent to housing buyer (Tajima, as cited in Opoku &
Abdul-Muhmin, 2010, p.224) and it is agreed by Morel et al. (2001, p.1119).
Particularly, “neighborhood” quality is paid intention highly to house purchase
decision making of customer (Gabriel & Rosenthal, 1989, p.240). Therefore,
H5. There is a positive impact of local environment on customers’ house purchase
decision.

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2.2.6. Purchase decision
Customer behavior is an important research topic for recent decades. “There is also a
clear shift from rational factors to psychological factors and to social decision factors”
(Bargh, 2002). Beside, there is a link between the “intention to purchase” to “decision
to purchase” of customers, especially the decision related to purchase real estate
(Ajzen, 1991, p. 179; Han & Kim, 2010, p. 659; Kunshapn & Yiman, 2011, p.7579).
2.1.1. Demography
“Demographic” characteristics of customers are internal factors related to decision
making (Mateja & Irena, 2009). “Demographic” characteristics consist of the
individuals in term of “gender, age, educational status, marital status, occupation, the
quantity of family members and children, as well as the residence property”.
“Demographic” characteristics consist of age (Yalch & Spangenberg, 1990), education
(Gattiker et al., 2000), income level (Dawson et al., 1990), gender (Zhang et al., 2007)
which are factors influenced on the “purchase intention” of customer.
Particularly, “gender” has significantly influence on the financial feature of the house
(Sengul et al., 2010, p.214). It is also confirmed that there is a significant difference in
real estate buying decisions to “age” and “gender”, and not to “educational levels” and