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Procedia - Social and Behavioral Sciences 60 ( 2012 ) 562 – 566

UKM Teaching and Learning Congress 2011 Critical Factors Affecting Double Storey Terrace Houses Prices in Bandar Baru Bangi

M.A.Khoirya, N.M. Tawilb, ,N.Hamzaha, A.I. Che Anic, S.Soodd

a Department of Civil and Structural Engineering, Faculty of Engineering and Built Environment, Universiti Kebangsaan b Unit of Fundamental Engineering Studies, Faculty of Engineering and Built Environment, Universiti Kebangsaan Malaysia c Department of Architecture, Faculty of Engineering and Built Environment, Universiti Kebangsaan Malaysia d Universiti Tenaga Nasional (UNITEN), Malaysia

Abstract

Everybody needs a house as shelter, either by renting or owning one. In order to have a good place called home, the location normally will be the priority in the list. Recently Bandar Baru Bangi which is recognized as Malay Elite Town has the significantly shown an increase in house prices starting from the mid 90’s. Thus, this area is the main focused of the research. The increase in the prices for double storey terrace housein major areas in Malaysia has been a concern for property buyers, especially indeveloping areas.There are twenty one factors listed for the research and the factors are grouped into three main groups; internal, external and capitalist factors. The survey analysis by the developers who handles the double storey terrace house sales in Bandar Baru Bangi for past years indicates that that the capitalized factor such as supply and demand, market conditions, and access to public transport and distance to the city centre are the factors influencing the price of double storey terrace houses in Bandar Baru Bangi. ©© 20112011 Published Published by by Elsevier Elsevier Ltd. Ltd.Selection Selection and/or and/or peer peer reviewed reviewed under under responsibility responsibility of the UKMof the Teaching UKM Teaching and and Learning LearningCongress Congress 2011. 2011

Keywords:terrace house; construction management; capitalist; urban; double storey

1. Introduction

The current substantial increase in price for terraced house urban areas is a concern. Migrations of rural folks to the big city, long-term investment by investors result in a large number of houses to accommodatethis situation. This causes the developer to take the opportunity to build more houses to gain profit(Lit, 2008). The study should be conducted to identify the main cause of the problem. Bandar Baru Bangi as a university town has led to increase in house prices has also become an issue. The increase in house prices in Bandar Baru Bangiiscaused by the existence of several higher learning institutions. Modern day terrace house design has perhaps overlooked one of the most important components of a tropical house that is the raised floor (N. M. Tawil, 2009).

Corresponding author.Tel:+6-03-8921-6691; fax:+6-03-8921-6960. E-mail address: [email protected].

1877-0428 © 2011 Published by Elsevier Ltd. Selection and/or peer reviewed under responsibility of the UKM Teaching and Learning Congress 2011 doi: 10.1016/j.sbspro.2012.09.423 M.A. Khoiry et al. / Procedia - Social and Behavioral Sciences 60 ( 2012 ) 562 – 566 563

House or its multiple form housing has remained the subject of research and discussion on a number of reputable platforms and around the globe. The importance of housing has increased many folds and still is growing every day past. Housing is a basic need for all. The increased population and income will lead to the increase in housing demand. The increase of working group indirectly will increase the demand for houses since they are the productive group and have the purchasing power. Housing represents the largest investment in an individual life. Developing countries are experiencing rapid industrial growth are striving hard to prevent themselves from being swallowed by the big economies. This trend by the underdeveloped nations results in unplanned growth, development and law transient in almost all walks of life particularly in urban centers. Alarming rate of population growth is another problem faced by these countries which ultimately creates the demand for increased number of housing facilities. In modern days, house is a basic icon of shelter where a man can plan to live and work under a protected environment (Che-Ani A.I., 2009). Besides renting, buying a house is a good alternative, especially for those who have been working. Nowadays the increasing of substantial price of terraced houses in urban areas is a concern. Depth study should be conducted to identify the primary cause of the problem. Bandar Baru Bangi perception as a university town has led to the increase in house prices has also become an issue. The increase in home prices in Bandar Baru Bangi is caused by the existence of several institutions of higher learning.

2. Literature Review

Bandar Baru Bangi covers an area of 1.869 hectares.It has developed in stages since 1974 with a target population of one hundred and twenty thousand people. Bandar Baru Bangi was conceived as an urban university town with the distribution of the type of area as in Figure I. In conjunctionwiththeBandar Baru Bangi having several numbers of universities, and training institutions for the district as well as a growth centre for the SouthKlang Valley,Bandar Baru Bangi development are almost complete(PKNS, 2009).

Residential house 15% 20% Institution

24% Industrial 24% Business

11% Infrastructure

6% Recreational

Figure 1.Distribution of the type of area in Bandar Baru Bangi

Various factors that affect house price, including high demand in the Valley area. Regardless of any country in the world, increased demand for housing is in line with the increase in world population. It results with the increase of house prices every year. In addition, problems related to land shortage has increased dramatically caused by housing developmentand also commercial buildings development. Housing developers is an owner or an agency that conducts and owns the housing project. They are also the entities that can control and determine the house prices. Three main factors that influence the house price have been identified. There are internal factors, external factors and capitalize factors. For this research the focus is only on capitalize factors. Capitalize factors are the factors that cannot be controlled by the project owner. Land is an important element in a construction project. For some projects, the government had to buy the land belonging to the private owner. Land is immovable property and change hands easily in a short time. Therefore, it is difficult to determine the market price. Therefore, the government has its own evaluator to assess the compensation to be paid to land owners whose land is taken for a government project (Ayob, 1989). 564 M.A. Khoiry et al. / Procedia - Social and Behavioral Sciences 60 ( 2012 ) 562 – 566

House prices will rise when the demand for housing in an area is higher than the supply. However, if housing prices rise too high and potential buyers are low in numbers, there is the possibility that house prices will drop to an affordable levels because there are no buyers who can afford to buy it (KPKT, 2010).According to Bayesian averaging approach, (Stadelmann, 2010)the variables that affect the price of a home in Switzerland at the Zurich metropolitan city can be narrow down to the several factors. The main variables which capitalize with a high posterior probability are location-specific real estate characteristics, municipal taxes and expenditure for culture, health and social well-being. Demographic as well as other socio-economic controls seem to be of minor importance. Furthermore David Stadelmen (2010) stated that view from the house,access to public transportation, the distance from main city centre and land availability.Finally the supply and demand, market condition and unforeseen conditions are also the factors that cause the increasing house prices.

3. Analysis Method

In conducting this research, double storey terrace houses have been chosen as the research focus since it has recorded the highest unit built in compared to other type of houses in the first quarter of 2010. Analysis that been conducted in this research is of relative importance index or RII. (Tawil, 2008) used RII in her research to identify the highest factor as well as to rank the other factors. The highest value of RII shows the most important factor effecting the house price and vice versa. RII for each factor are calculated using the given formula as follows:

index relevant = 1n1 + 2n2 + 3n3 + 4n4 +5n5 5(n1 + n2 + n3 + n4 + n5)

5 = ∑ i =1 wi x fxi (1)

With; n1 = strongly disagree n2 = disagree n3 = slightly agree n4 = agree n5 = strongly agree

5 100 index relevant = ( ∑i =1 wi x fxi ) x (2) N

With; wi = weightage given by the respondent, i = 1,2,3,4 and 5 fxi = frequency of each respondent N = total respondent

(Source: Tawil et.al 2008)

4. Result

The analysis of the results from the questionnaire found that the factors that influencethe sale of double stories houses in Bandar Baru Bangi are as Table 1. Data reliablity value based on Cronbach'sAlpha was 0.709. This is more than 0.6, which indicates the data is reliable. The result is the RII ranking from the highest factor to the lowest factor that affects the house prices in Bandar Baru Bangi. Results show that supply and demand is recorded as the highest value of RII, follow by distance from city centre as the second heights. The detailis shown in Table 1 and Figure 2.

M.A. Khoiry et al. / Procedia - Social and Behavioral Sciences 60 ( 2012 ) 562 – 566 565

Table 1. R11 ranking

Cause Factor RII Supply and Demand 126

Distance From City Centre 122

Market Conditions 120 Access to public transportation 118 Land Availability 113 University town 108 View from house 104

Unforeseen Events & Conditions 85

140 Supply and Demand 120 Distance From City 100 Centre 80 Market Conditions 60 40 Access to public transportation 20 Land Availability 0

Figure 2. Graphical RII ranking

5. Discussion

5.1.Supply and Demand

Double storey terrace house is a kind of landed house andis more affordable than many others type of houses such as semi-detach houses and bungalows. Therefore the double storey terrace housegrabs the attention of many people, especially the community from . Based on supply and demand curve, there is the possibility that house prices will drop to an affordable levels when there are no buyers who can afford to buy the house. On the other hand,house prices will rise when the demand for housing in an area is higher than the supply. However, if the house prices rise too high and the numbers of potential buyers are decreasing. (KPKT, 2010).

5.2.Distance from city centre

The distances of an area to the city center are significantly affecting the house price. Based on this situation, the nearer an area of city center, the more expensive the house price are. Conversely, if the area is getting close to the city center, the price of homesin the area gets more expensive. Thus, house prices will increase when approaching the downtown area, populated mainly by the middle class (Clift, 2003). 566 M.A. Khoiry et al. / Procedia - Social and Behavioral Sciences 60 ( 2012 ) 562 – 566

5.3.University Township

This factor ranked at number four. It is means that this factor does not really affect the increase in house prices. Bangi is a popular destination in southern Selangor. This strategic location is known as knowledge city (academia neighbourhood); which hasfive government and public universities. From RII analysis,the university town rank ninth out of all the factors. The mean value for the factor, 3.83 indicates that these factors slightly affect the price of houses in Bandar Baru Bangi.This factor can be said as the perception bysome people, especially who involve in real estate investors. This is because in academia neighbourhood has become a strategic location for investors to add another property portfolio in their investment.

6. Conclusion

A total of eight capitalist factors that influence the price of double storey terrace houses were reviewed to be listed in the questionnaire for the housing developer in this study. Capitalist factors are factors that cannot be controlled by the owner. After the analysis, RII ranking was done using Microsoft Excel. The results show that the supply and demand factors are the main factor that affects the housing price, followed by distance from city center and market conditions. This is a major factor which causes the increase in house prices in Bandar Baru Bangi. Furthermore price index in Bandar Baru Bangi area is going up and down due to uncertaintyin marketconditions. It can be concluded that all the objectives described in this study have been answered.

Acknowledgement

We would like to thank UKM for providing the research grant (PTS-2011-022).

References

Ayob, A. M. (1989). Perancangan dan penilaian projek pembangunan. : Dewan Bahasa dan Pustaka. Che-Ani A.I., C. A. H., N.A.G. Abdullah, M.M. Tahir, M.F.M. Zain, Mohd-Tawil N. (2009). The Potential to Develop Design Quality Automation of Residential Housing. Paper presented at the Proceedings Of World Academy Of Science, Engineering And Technology. Clift, M. (2003). Life-cycle costing in the construction sector. Journal of Sustainable building and construction, 24, 37 -45. KPKT. (2010). Kementerian Perumahan dan Kerajaan Tempatan. Lit, P. K. (2008). What’s ahead for Malaysia? Current challenges and emerging trends. N. M. Tawil, M. N. D., A.I. Che-Ani, N.A.Goh, M.F.M.Zain. (2009). Linearity In Between House Price And Annual Management Fund In High- Rise Residential In Kuala Lumpur, Malaysia. Paper presented at the Internatonal Confrence on mathematics, Statatistics and Their Applications Bukittinggi, Indonesia. PKNS. (2009). Bandar Baru Bangi. PKNS magazine. Stadelmann, D. (2010). Which factors capitalize into house prices? A Bayesian averaging approach. Journal of Housing Economics, 19, 180-204. Tawil, N. M. (2008). Managment Cost of High Rise Residential Scheme in Malaysia: The Service Charge Aspect. The Malaysian Serveyor.