Impact of Transport Costs on Housing Decisions
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This study will emphasise on the effect of transportation cost towards the decision of housing location. The case study will be held in Bandar Saujana Putra, Selangor. This study will be using the quantitative methods to further study the effect of transportation cost towards the decision of housing location.
In the search for lower cost housing, working families often locate far from their place of work and this will resulting in the increasing of their transportation costs and commute times. However, for many such families, the transportation costs exceed their housing costs. According to Bernstein (2001), affordability has never been just about housing cost, it is actually the interaction between housing and transportation cost that provide more meaningful measure of affordability. Hence, choosing a location-efficient neighbourhood near transit, services and jobs, families can reduce monthly household expenses.
This study will emphasise on the model of land use and prices formulated by Von Thunen in 1826, a German economist. The theory concentrates on difference in relative transport costs in different types of agricultural production. According to J. Harvey (1997), he made assumptions that a boundless flat and featureless plain over which natural resources and climate are distributed uniformly and there is a central market for the area.
Furthermore, he also assumed that the farmer used uniform horse and cart transport facilities to this central market, and different foods can be grown, but since these differ in bulk, the cost of transporting them to the market also differs. For each type of product, transport cost varies directly and proportionately with distance from the central market. However, the receipts from cultivation of one hectare of land are the same for all types of product.
Given by these assumptions, it pictures the rent-paying capacity as a function of transport cost and the distance from the market. As distance from the market increases the total costs are raised by the increased cost of transport of the cultivation product. However, this study will relates this theory with the decision of housing location of the case study in Bandar Saujana. It will examine whether the theory match the pattern of the housing location in regards with the transport cost.
Bandar Saujana Putra is a new self-contained township located in Sepang Selangor. The township launched the first phase of the development in 2004, has an easy access to the town centre using ELITE Highway. Its easy access to the town made Bandar Saujana Putra an ideal for the case study as the resident able to travel to the respective location of their needs.
- Statement of Problems:
The township of Bandar Saujana Putra is located approximately 20km from the centre of Kuala Lumpur and the residents enjoy an easy access via ELITE Highway. However, how the transportation cost is plays a role in determining the decision to reside in Bandar Saujana Putra?
Furthermore, does the Von Thunen theory explain the pattern of location theory in the case of Bandar Saujana Putra?
- Objectives of Study:
The main objective of the study is to examine the effects of transportation cost towards the decision of housing location.
The second objective of the study is to examine whether Von Thunen theory match the pattern of location theory in Bandar Saujana Putra.
- Scope of Study:
The study is confined to the areas of Bandar Saujana Putra, Selangor since it is located approximately 20 km away from city centre and easily accessible. The respondent of the questionnaire are limited to the residents of Bandar Saujana Putra and analysis as well as findings from the rental and property price will be used to accomplish the objectives mentioned above.
The difficulty and limitation for the study arise when distributing the sample questionnaire and to get the feedback from the respondents. There will be situation where the respondents that have been approached will not or hesitate to give cooperation to the sample questionnaire.
- Research Methodology:
The study would be done in an analytic manner. The information that is needed to examine the issue will be obtained from primary and secondary data.
- Primary Data:
Primary data refers to the first-hand data, which required data collection. For this study, it will mainly involve in the distribution of questionnaire to the residents of Bandar Saujana Putra. The analysis will also be done according to the study areas in order to examine the transport cost of the residents. The question will be in objective manner administered to arrive to the objectives of the study.
- Secondary Data:
The second method is secondary data which will mostly comprise of data collection through references of such as relevant books, journal, conference paper, newspaper and magazine articles and also online references. The data will also obtain from the economic text book which further explained the theory related to the study.
- Significant of Study:
It is hoped that the anticipated outcome of this study can benefit the government especially the Town Planners in determining the structure of local city plan. While planning for housing development and also commercial hub, the developer and town planners have to consider the factors of distance and transportation as these two related closely to the affordability factor of a household.
Secondly, this study will also benefit the house buyer in determining the location of the house as the distance and transportation cost is concern. The study will enlighten as how the location factors of property affects the daily budget of a household. The study also points to the importance of infill development that expands the supply of affordable housing in inner city and older suburban neighbourhoods that have good access to traditional job centres; the development of more affordable housing near transportation hubs and suburban employment centres.
Lastly, the study intends to benefit the students as it will open up more discussion regarding the issue. Further research can be done to improve the findings of this study and hopefully it will beneficial towards the knowledge of the students.
- Organisation of Study:
This study will consist of five chapters where the first chapter provides a brief concept and overview of Von Thunen theory that will be discussed further in the Literature Review. The first chapter consist of the introduction of the study and also statement problem that initiates the study. The first chapter also explained on the limitation faced on doing the study and the significance of this study.
Meanwhile, the second chapter will discuss on literature review related to the study. It will mainly focus on the concept of the dynamic of Von Thunen theory in relation of the property market. The next part of the chapter will look further on the theory of urban economic and the formulation of the theory towards the locational decision. It will further strengthen the understanding of the theory based on the literature reviewed.
Chapter three will discuss further on the methodology used in obtaining the information for the study. The quantitative methods of distributing questionnaire will be discussed further as well as the qualitative research methods used in the study. The qualitative research of collecting, analyzing, and interpreting data is by observing the current market trend. This chapter will further emphasise on the case study chosen which is Bandar Saujana Putra, Selangor.
The fourth chapter of the study will shows the analysis of the data collected previously. Information and data that is obtained from the survey of the market rental will be further detailed in this chapter using the appropriate graphs and diagrams. The analysis of the findings is further discussed in relation to the patterns of economic rent in the market.
The last chapter will conclude the analysis of the findings and draws the recommendation of the further study to compliment this research. It will also determine the confirmation of the objectives of this study as well as the holistic achievement of the study.
Chapter 2: Literature Review
This chapter will explain further on the previous literature and writing in regards of the urban land use in general and Von Thunen theory of locational decision. Other than that, this chapter will also discuss on the limitation of the theory as well as the formulation of the theory.
Urban land use comprises two elements; the nature of land use which relates to which activities are taking place, and the level of spatial accumulation which indicates their intensity and concentration. Central areas compared to peripheral area have a high level of spatial accumulation and corresponding land uses such as retail while peripheral areas, on the other hand have lower levels of accumulation. In addition most economic as suggested by Gordon (2005), social or cultural activities imply a multitude of functions, such as production, consumption and distribution.
These functions take place only at specific locations and are part of an activity system. Therefore activities have a spatial imprint whereby some are routine activities as they occur regularly and are thus predictable, such as commuting and shopping. Others are institutional activities that tend to be irregular, and are shaped by lifestyle for example sports and leisure, by special needs for example healthcare. Still others are production activities that are related to manufacturing and distribution, whose linkages may be local, regional or global. In short, the behavioural patterns of individuals, institutions and firms have an imprint on land use and the representation of this imprint requires a typology of land use, which can be formal or functional:
- Formal land use:
The representations are concerned with qualitative attributes of space such as its form, pattern and aspect and are descriptive in nature.
- Functional land use:
The representations are concerned with the economic nature of activities such as production, consumption, residence, and transport, and are mainly a socioeconomic description of space.
- Residential accommodation:
The stock of residential accommodation varies from multi-storey flat near the city centre, through back-to-back terrace houses and then semi-detached, to detached houses often standing in spacious ground. This stock of residential accommodation reflects decisions taken at some time in the past because of the building costs rule out the choice of new construction for a substantial part of the population. If the residence is to compete land away from other uses then sites would have to be developed to higher densities in or near the position of greatest accessibility than elsewhere, because sites in that area provide optimum location for higher order uses such as offices and retailing.
According to Smith (1997), there is a relationship between a person's income, his place of residence and his place of work, although the correlation is not fixed, for individuals differ in the proportion of their incomes they choose to spend on accommodation. An individual, according to Cunningham (1999), seeking to maximise utility, must weigh his desire for access to his place of work against various possible combinations of commuting costs and accommodation prices and his other desires for urban contacts and amenities.
Incomes will determine how far a household's residence preference can be indulged. With differing preference consumers in the same group of income may demand different type of accommodation. On the other hand, those desiring contacts furnished by near central locations have the advantage of lower transport cost but frequently have to sacrifice certain site amenities. Where persons of unlike incomes lives at distances where they incur the same commuting costs then the person with the highest income will occupy the best accommodation, and so on.
- Urban Land Use:
Commercial land use according to Faraday (1997) and supported by Lean (2001) involves relationships with its supplier and customers as it support the claim that land use in both formal and functional representations implies a set of relationships with other land uses. A level of accessibility to both systems of circulation must be present because relationships with suppliers will dominantly be related with movements of freight; relationships with customers would include movements of people. Since each type of land use has its own specific mobility requirements, transportation is one of the factors of activity location and is therefore associated intimately with land use. Within the urban system each activity occupies a suitable, but not necessarily optimal location, from which it derives rent. Transportation and land use interactions mostly consider the retroactive relationships between activities, which are land use related, and accessibility, which is transportation related. These relationships often have been described as a "chicken-and-egg" problem since it is difficult to identify the triggering cause of change; do transportation changes precede land use changes or vice-versa?
Urban transportation aims at supporting transport demands generated by the diversity of urban activities in a diversity of urban contexts. A key for understanding urban entities thus lies in the analysis of patterns and processes of the transport / land use system. This system is highly complex and involves several relationships between the transport system, spatial interactions and land use:
- Transport system:
It will consider the set of transport infrastructures and modes that are supporting urban movements of passengers and freight. It generally expresses the level of accessibility.
- Spatial interactions:
It will consider the nature, extent, origins and destinations of the urban movements of passengers and freight. They take into consideration the attributes of the transport system as well as the land use factors that are generating and attracting movements.
- Land use:
It will consider the level of spatial accumulation of activities and their associated levels of mobility requirements. Land use is commonly linked with demographic and economic attributes.
Accessibility evaluates the net economic costs of moving persons and goods between one place and another place. It is, therefore, not only concerned with the distance to be travelled between two places but, more important, with the time taken to travel that distance, i.e., with all the factor costs in any journey (Lean , 2001). However, accessibility does not affect solely the real costs incurred by movement but also the real benefits derived.
The residential demand for urban land also depends upon accessibility but the capital sum a residential user pays to obtain a site represents a money evaluation of the satisfaction to be derived from that site. According to Goddall (2001) residential demand depends upon utility or satisfaction and the residential user seeks that the site which allows him to maximise his utility. Thus, for the residential user travelling, whether to work, to shops, or for pleasure, represent a disutility and each person wishes to minimise these disutilities such as the time and money costs of travelling.
Disutilities would be minimised if a residential user located himself on a site with a high degree of accessibility, so residential use would compete with business uses for accessible site. However, for a residential there are certain amenities considerations involved in the choice of site which confer satisfaction/utility upon the user. The amenity value of a site depends upon factors not readily assessable in financial terms such as space, quiet, fresh air, etc. According to Wardour (1997) the choice of a residential site is, in many cases, a compromise because the desire to minimise travelling disutilities demands a relatively accessible, therefore central site, whereas the quest for amenity leads towards less accessible sites some way from the city centre. Greater amenity can usually be achieved by accepting additional travelling disutility.
- Urban Land Use Model: Von Thunen Ring Model:
The relationships between transportation and land use are rich in theoretical representations that have contributed much too geographical sciences. Several descriptive and analytical models of urban land use have been developed over time, with increased levels of complexity where all of them involve some consideration of transport in the explanations of urban land use structures according to Carter (1995). However, this study will emphasise on the oldest land use theory by Johann Heinrich Von Thunen. According to Rodrigue (2000) modern location economics began with Von Thunen (1826). Being the first to develop a basic analytical model of the relationships between markets, production, and distance he too looked upon the agricultural landscape as the purpose in this study. The relative costs of transporting different agricultural commodities to the central market determined the agricultural land use around a city. The most productive activities will thus compete for the closest land to the market and less productive activities will be located further away. The model has a set of basic assumptions which reflects agricultural conditions around a city in the early 19th century:
There is one isolated market in an isolated state having no interactions (trade) with the outside.
- Ubiquitous land characteristics:
The land surrounding the market is entirely flat and its fertility uniform.
It is assumed there are no transport infrastructures such as roads or rivers and that farmers are transporting their production to the market using horses and carts. Transportation costs are dependent of the type of commodity being transported to the market as well as the distance involved.
Comparison of the relationships between production cost, the market price and the transport cost of an agricultural commodity is explained thoroughly as follows:
R = Y(p-c) - Yfm
- R = Rent per unit of land.
- Y = Yield per unit of land.
- p = market price per unit of yield.
- c = Average production costs per unit of yield.
- m = Distance from market (in kilometers or miles).
- f = Freight rate per unit of yield and unit of distance.
Carter (1995) further explained that all agricultural land uses are maximizing their productivity (rent) whereby in this case it is dependent upon their location from the market (Central City). Discourse community of farmer play significant role as they are to maximize his profit which is simply the market price minus the transport and production costs. The most productive activities such as gardening or milk production or activities which cost higher in transportation (firewood) are located near to the market. The above figure provides an overview of Von Thunen's agricultural land use model with the basic assumptions being applied such as isolation, ubiquity, and transportation. It can be divided into two parts:
- The pure isolated state over an isotropic plain (left). In this case, the model takes a shape of perfect concentric circles.
- The potential impacts of modified transport costs (a navigable river) and the presence of a competing center (right).
The relationships between agricultural land use and market distance are very difficult to establish in the contemporary context.
Von Thunen primary objective was to determine the relationship between the intensities and type of agricultural production and the available markets. The physical and cultural complexities however, led him to disregard the variations in a large number of environmental and social conditions. Instead, he made seven basic assumptions, which formed the core of the theory. The ideal site consisted of completely rational (optimising) economic behaviour, an isolated state, a single central city, settlement in village far away from the city centre, and a racially homogeneous population, uniform topography, uniform climate and soil fertility, and a relatively uniform and primitive transportation cost according to Griffin (1968) and later supported by Rodrigue (2001).
Sinclair (1966) however noted that Von Thunen primary concern was to discover and examine the laws which governed the pattern of agricultural land use existing in his time and within his experience. His dominant recognition was the land use pattern depended upon competition between various types of agriculture for the use of particular piece of land. The controlling factor in this competition was Economic Rent as defined here the return of investment in the land. Later it is sopported briefly by Rodrigue (2001) that form of land providing the greatest Economic Rent would make the highest bid for the land and displaced all others.
The facts that transport cost increased with distance and they imparted a spatial variation to Economic Rent become an eye opener to Von Thunen whom later comes to realise that transportation costs were a primary factors determining Economic Rent. Hence, Economic Rent from any one land use can be expressed as a function of a distance from the market.
- Limitation of the Theory:
In constructing the model complicating factors were assumed away, providing a laboratory in which the interplay between a small number of essential causal influences and their relations with certain effect could be studied. In particular this model provided a mechanism in which changing technical and economic inputs could be linked with evolving geographical patterns of production according to Samuelson (1983) and Linehan (2003).
The attraction was thus, that the theory simplified the world by concentrating on the effects of one primary variable, transportation costs, on the location of agricultural production. Von Thunen himself accomplished this by creating the idea of the economic margin. In his view, land use areas were bounded by margins where one use became more cost-effective than another. Given von Thunen's thesis, Peet, (1987) could attempt to explain how these factors may have changed historically and explain changes in the location of production. The uses of Von Thunen model, or derivatives of it, continue to this day among quantitative geographers for example, Wang and Guldmann (1997); Hill and Smith (1994); Linehan (2003).
Even in 1966, however, the limitations of the model were accepted. Gaston (1997) followed by Linehan (2003) for instance admits "Von Thunen's analysis is basically descriptive rather than normative" and does not explain changes over time or the possible effects of economies of scale. Despite this, Smith (2000) promotes the model because it made marginal economics geographical. In the years since these limitations in particular the fact that Von Thunen ignored changes over time have often been mentioned, but the model survives in importance in the minds of geographers and is a main subject of beginning economic geography courses. The most likely reason for this is that Von Thunen rings actually appear to exist in many cases. For instance, cities are often surrounded by a dairy ring. Von Thunen rings are one of the few very easily understandable models in geography that truly appear to explain a pattern in the world, even if the model is primarily descriptive and does not give much idea about how exactly this pattern came to be or what might happen to it in the future. Harvey made this argument in Social Justice and the City (1997), arguing that social scientists are attracted to models such as the Isolated State because they appear to be empirically relevant.
Barnes (1998), following Haraway (1997). Latour (1987) and Linehan (2003), comments on the manner in which von Thunen's model, in particular the concentric zone diagram showing agricultural land use rings of decreasing intensity with distance from the city, has been "fetishized" within economic geography. Barnes (1998) argues, based on the work of Barnbrock (1997) and Harvey (1997) that Von Thunen's concept of the frontier wage, the "just reward" for work done that, if paid, would ensure worker harmony, leads to a more complete understanding of Von Thunen's work. This sense of harmony was also Von Thunen's vision of the isolated state in general, "constructed not just an isolated state, but an ideal one".
The rings were "less a description of how the world is, but how it should be once social harmony was realized". The idea that the isolated state was not just descriptive but also prescriptive is emphasized by Barnbrock (1997), who writes that for von Thunen "the Isolated State is the 'true' representation of the final end mankind should strive for." He further quotes von Thunen, who states "in the Isolated State ... we have in mind only the final goal". Harvey points out, however, that this was an essentially conservative goal. Through the imposition of the frontier wage and a more harmonious land use pattern, "class conflict and social polarization" would be minimized within German society. The lesson learned by neo-classical economists, Harvey argues, was that "economic science could seek and spell out principles of social harmony without appeal to the political economy of the spatial fix".
The use of Von Thunen's ideas within geography highlights the conflicts within a discipline that strives both to find regularity in the world and to explain the patterns seen in specific places. The Isolated State theory is attractive because it one of the few easily understood location theories for which empirical examples can be easily drawn. Of course, these examples are never absolutely correct and often seem overly simplistic. Barnes' (1998) analysis of Von Thunen and the social construction of Von Thunen's theory within economic geography particularly help understand the use of Von Thunen within agricultural economics supported by Watson (2005). The idea that Von Thunen's theories were not just descriptive but also prescriptive more closely parallels the attitudes of the agricultural economists, who were searching not just to describe land use but often also to restrict it in order to build a more harmonious dairy economy.
- Formulation of the Theory towards Locational Decision:
In an attempt to test the hypothesis that market forces largely allocate the supply of sites among the alternatives uses within the urban area, Von Thunen's agriculture land use model is adapted. The rising transportation costs explain the differentials rent among homogenous site as stated in the theory explained by Moss (2001). Understood the accessibility within an urban market will be at maximum at the city centre; the assumptions of a competitive market and a homogenous site will be given. As far as transport and commuting cost is concern the accessibility tend to decrease when distance from the market centre increases.
Moss (2001) concluded that firms and households have no intentions to change location and ceteris paribus because profits and other objectives are maximised. Next output is optimal and the maximum efficiency of the city as a productive unit is realised. In fact, the resulting structure of land uses reflect institutional arrangement such as zoning ordinance, transportation system and policies of financial institutional as well as the competitive ranking of the city, i.e. its economic base. The location of firms and households within this structure depends heavily upon competitive bidding for specific sites since rent differentials result market forces require from each site that rent resulting from maximum utilisation or highest and best use. Maximum economic rent occurs at the market centre because the supply of sites and average transportation and commuting costs for the local market are least according to Seyfried (1963).
Seyfried (1963), followed by Linehan (2003) also suggested that the wages and interest are among production costs and they are assumed to be independent of location, but transportation costs rise as distance increases which later cause the rent, the surplus of gross revenue over production costs, decline proportionately. The supply of sites, i.e., more and larger land unit, increases with the distance from centre. Therefore competing user of sites will locate relative to their economic rent potential so that a structure of site values relative to location results from market forces. This structure of urban land market can be visualised as a rent or value surface; the market centre is the apex which is the point or area of highest site value. In the other word, rent decline with distance so do the value and land uses too change. If sites of equal value are related, the iso-value lines or contours are a function of site rent or value. Thus the spatial structure of land uses or the urban land market at a moment of time can be shown by the rent or value function or gradient.
The chapter on literature has discussed the concept of urban land use, the linkage between urban land use and the Von Thune theory, limitation on the theory as well as formulation of Von Thunen theory. The following chapter will discuss on the methodology of the study used in gathering all the information needed.
This chapter discusses in details the research methodology, which ensured that the objectives of the study can be achieved in a proper way. An appropriate research methodology application may avoid deviation against the objectives and gives clearer understanding on how the study is to be carried out. Validity of the research data and reliability of measurement will affect the practical research and accuracy of the result. Thus, the research methodology is directly connected to objective and problem statement of research.
The second part of this chapter will go into details of the case study of Bandar Saujana Putra, Selangor. According to Yin (2003) a case study design should be considered when:
- the focus of the study is to answer "how" and "why" questions;
- you cannot manipulate the behaviour of those involved in the study;
- you want to cover contextual conditions because you believe they are relevant to the phenomenon under study; or
- the boundaries are not clear between the phenomenon and context.
- Research Design:
Research design can be classified into exploratory research and conclusive research. Exploratory research design is mostly in qualitative nature while conclusive research design is in quantitative nature. It is more focus on the collecting data from primary or secondary data. It also involves in many qualitative data collection techniques such as focus groups and depth interview (Shukla, 2008). Qualitative data collection will provide a lot of information, however it also hard to interpret from the data collection. Meanwhile, qualitative case study is an approach to research that facilitates exploration of a phenomenon within its context using a variety of data sources. This ensures that the issue is not explored through one lens, but rather a variety of lenses which allows for multiple facets of the phenomenon to be revealed and understood (Baxter, 2006).
Conclusive research design as mention earlier, it is in quantitative nature. It also determining the frequency when an event is occurs. The data collection or findings from conclusive research design are more reliable due to the statistical analysis. There are two types of data collection in the research design: primary data and secondary data. Primary data are the data originated by researcher to define and analyze the problems according to their research (Shukla, 2008). Secondary data can be collected from any sources. It may be able to be found in journal, newspaper or through internet.
For this study, it will mainly use conclusive research design, which is quantitative in nature. Survey method is adopted and will be conducted by distributing questionnaire to the target group of the study. Respondents of 75 residents of Bandar Saujana Putra will give their answer or opinion of the real situation. However, a structured questionnaire will be conducted as it is less relies on the open interpretation of the respondents. The survey method can be analysed by using Statistical Package for the Social Science (SPSS) 17.0.
- Method of Data Collection:
There are two types of data collection used in this study: primary data and secondary data. In primary data collection, the data is collected using methods such as interviews and questionnaires. The key point here is that the data collected is unique and cannot be accessed by anyone else unless it is published. Secondary data is data that has already been collected by someone else for a different purpose.
- Primary Data:
There are three different method used in collecting primary which are through questionnaire, interview and observation. These methods include qualitative and quantitative data. For example, questionnaire is quantitative data as it is analyzed and presented in tabular and graph form. Meanwhile interview and observation are qualitative data as it mostly on words and text.
- Secondary Data:
As secondary data is the data that already been published for reference to others in related field, data from books, journals, newspapers and websites are gathered and included in the research. Secondary data can be used in two different ways. Firstly, report the data as its original and the second one is reporting the same data for a different purpose to the original.
- Data Analysis:
Data analysis which is used for this study is Statistical Package for the Social Sciences (SPSS).It is a computer application which can analyse data statistically and accurate. This computer application can be used for whichever research measurement and scaling that researcher use prepare in the questionnaire. It is also allows preparation, analytical reporting, modelling, table and graphic to analyse the data collection. SPSS has already changed their product name to Predictive Analytics Software in 2009.
- Case Study: Bandar Saujana Putra:
Bandar Saujana Putra is taken as the case study for this study because it has a pattern similar to the theory studied. Von Thunen simplified everything on his theory by assuming that villages were located on flat plains and they used the transportation systems. These two assumptions were important to his conclusion. His central concern was the importance of transportation cost or effort, and the pattern of uses provided people with the easiest access to those places they had to go to most often (Mckenzie, 2001).
For this particular study, a survey of the decision making of residence of Bandar Saujana Putra in regards of the location is conducted and sought to determine the types of decisions made by the respondents and the factors that influenced the decision making. A case study was chosen because the case was the decision making of the residence of Bandar Saujana Putra, but the case could not be considered without the context, the demand, and more specifically the location and the income proportion. It was in these settings that the decision making skills were developed and utilised.
Bandar Saujana Putra is located in Mukim Tanjung Dua Belas, Daerah Kuala Langat. It is held under the jurisdiction of Majlis Daerah Kuala Langat. The township is developed by LBS Bina Sdn Bhd and Talam Corporation Sdn Bhd. The district of Kuala Langat is compartmentalise into two section, the first area comprise of 62.924 square kilometres is held under Majlis Daerah Kuala Langat, and the rest is held under Pejabat Daerah Kuala Langat.
It is located in the southwest region of the state of Selangor and it is bordering the southern part of Klang and western region of Sepang. The total population of the whole district is currently reaching up to 200,000 with the majority of Malays, followed by Chinese and Indians. For the population distribution according to the municipal record, more than half of the population is still living in the rural areas.
- Bandar Saujana Putra:
Bandar Saujana Putra is located adjacent to other townships of Putra Heights and UEP Subang Jaya. The integrated development of Bandar Saujana Putra comprise of the total areas of 498.73 hectares, by LBS Bina Sdn Bhd and Talam Corporation Sdn Bhd. The number of residential units is 9,325 and the total area of commercial unit is 27.88 hectares. According to the developer, up to date, the total population for the township are 46,625 and there is still 60% of the project has not been completed yet. The estimated Gross Development Value of this township is RM 5 billion, spanning over a period of 5-8 years. Since its first launch in February 2003, it has sold more than 4,000 units of development.
Bandar Saujana Putra is easily accessible via Lebuhraya Utara-Selatan Lingkaran Tengah (ELITE Highway), E6. The accessibility of the township is further enhanced by the construction of ELITE Highway Interchange dedicated to this township, which has been completed and opened to the public since February 2008; this interchange will provide the residents of Bandar Saujana Putra easy access to Petaling Jaya, Kuala Lumpur, Cyberjaya, Putrajaya and the KLIA.
Talam Corporation Berhad (Talam) is a Malaysia-based company that is principally engaged in the provision of management services, investment holding, and property development. The Company has two segments: Property investment and development is engaged in investment holdings, development of residential and commercial properties, and Hotel and recreation, which operates and manages hotel and club and other related services.
Property investment and development is the core business of Talam, which contributed 93.5% of its turnover during the fiscal year ended January 31, 2009 (fiscal 2009). Some of the Company's wholly owned subsidiaries include Abra Development Sdn. Bhd., which is engaged in property development and investment holding; Era-Casa Sdn. Bhd., which is engaged in investment holding; Expand Factor Sdn. Bhd., which is engaged in property development and investment holding, and Galian Juta Sdn. Bhd., which is engaged in property development.
Saujana Putra is a project undertaken by Galian Juta Sdn Bhd, a wholly owned subsidiary of Talam Corporation measuring about 200 acres in size, is located opposite Putra Heights in Mukim Tanjung Duabelas, Kuala Langat District. With a proposed development comprising low to medium cost apartments and medium cost terrace house, it will generate a Gross Development Value of RM351.2 million over a development life span of six (6) to seven (7) years. Suajana Putra which was launched in 2003 has achieved sales of 498 units valued at RM69.9 million as at 31 January 2005.
LBS Bina Sdn Bhd has expanded rapidly after its listing on Bursa Malaysia through a reverse takeover. This takeover has also extended LBS' wing across the globe into Zhuhai, China. Presently LBS Group has operation in the Klang Valley, Perak, Pahang and Johor in Malaysia as well as in Zhuhai, China. Despite venturing into other business such as investment holding, property management, turfing and landscape contracting, insurance agent, trading in building materials and selling of membership cards covering personal insurance, property development still continue to be the main activity of the Group.
All the case study had successfully put up good result in the location and background of Bandar Saujana Putra. It has a very significant characteristic to carry out the study.
RESEARCH FINDINGS ANALYSIS:
The previous chapter has discussed the methodology and case study of this dissertation. The research has been conducted by using the data obtained from the survey distributed to the respondents. The general information of the respondents will also be discussed in order to study the demography of the study area.
- Research Designs:
The research is based on 21 structured questionnaires which relate to factor why the respondent choose to reside in Bandar Saujana Putra in regard to the transportation cost they incurred. The sets of 75 respondents who live in Bandar Saujana Putra were distributed with the questionnaire.
- Data Analysis Technique:
Response from the questionnaire sheets received from the respondents will be accumulated and sorted by using SPSS 17.0 and the result are shown in pie chart, bar graph.
- Age Structure:
Age is significant in analysing the population of the case study. From the survey that has been done, it shows that majority of 49.33% of the respondents are in the aged of 35 to 44 years old. It followed by the group aged 26-34 years old amounting to 18.7% and 20% of them aged 44 years old and above. The remaining of 12% of the respondents of this survey aged 17-25 years old. The housing demand and the decision to reside in a particular location strongly influenced by the stage of human life cycle based on their needs and demand. Hence, it is important to study the correlation between the age and the decision to reside in Bandar Saujana Putra.
- Marital Status:
As we can see from the pie chart above, it shows that 58.67% of the total respondents are married, followed by 24% are divorced and the remaining of 17.33% are still single. Closely related to the prime marital status mentioned above indicates that the first time buying purchasers. It is also indicates an important demand of the real estate in the country. In Malaysia generally, it shows that most of the housing owner are married and only minority of them are single. It is also indicates that Bandar Saujana Putra is preferred by the married couple rather than singles and divorcee.
- Employment Status:
Based on the information gathered, almost half of the respondents which is 49.33% is working in a private sectors, whereas 25.33% working in public sectors. The remaining of 18.67% and 6.67% are working independently and retired respectively. In general, Bandar Saujana Putra accommodates people in a private sector compared to other sectors. The choice of house characteristics and the location is indirectly determined by the employment status of the owner. Demand pressure in property is related with the increasing employment in the various economic sectors, thus affected the demand for the housing stocks in Bandar Saujana Putra.
- Ownership Status:
Based on the pie chart above, it is found out that majority of the respondents owned the house that they occupied, which is 74.67% and the remaining of 25.33% are tenant. It shows that majority of the population in Bandar Saujana Putra prefer to buy the house rather than renting probably because of affordability factors.
- Monthly Loan:
According to the bar chart above, it indicates that almost 34% of the respondents pay the monthly loan repayment for their house between RM1001-RM1200 and the same percentage for the amount of monthly loan repayment of RM1201-RM1400. The figure is followed by 25% of the respondent pay RM1401-RM1600 and remaining minority of 5.36% and 1.79% pay the amount of monthly loan repayment of RM700-RM1000 and RM1601 and above respectively. From the figure, we can conclude that the almost 70% of the respondents own at least a double-storey terrace house in Bandar Saujana Putra based on the loan repayment. Meanwhile, for those who pay below RM1000 probably bought an apartment unit or flat in Bandar Saujana Putra.
- Monthly rental:
Based on the question earlier, only 25.33% of the respondent renting the house they occupy whereas the rest own the house they occupied. Based on the 25.33% of the respondent, 63.16% pay the monthly rental of RM701-900, followed by 21.05% of the tenants pay RM500-RM700 monthly for the house. Whereas, the remaining of 15.79% of the tenants pay the monthly rental of RM901-RM1100 for the house they occupy. The catchment of rental in Bandar Saujana Putra is slightly lower compared to the surrounding areas such as Putra Heights. Based on the observation on the current market rental, double-storey terrace house catch a rental between RM701-RM900 per month. From the graph above, we can conclude that more than half of the tenants choose to rent out a double-storey terrace house rather than flats, apartments or semi-detached house.
- Household Size:
According to the data above, the total of 28% of the respondent are having the household size of 5 and above, followed by 26.67% or the respondents are having the household size of 4. The household size of 3 persons amounting to 20% of the total respondents and followed by singles, 17.33% having household size of 1 and the remaining of 8% are having 2 persons in the household. It shows that the majority of the population in Bandar Saujana Putra are families. From the household size that is collected, majority of the working families with children choose Bandar Saujana Putra compared to the singles and married couples without children.
- Monthly Household Income:
Based on the survey distributed, the majority of 40% of the respondents earning between RM3001-RM5000 per month for the household, followed by 33.33% of the households earn between RM1001-RM3000 per month. The figure is followed closely with the total of 21.33% of the households earn between RM5001-RM7000 per month. The minor group of 4% earn below RM1000 per month for the household and the remaining of 1.33% of the household earn RM7001 and above. Income is the major determinant when it comes to the decision to reside in a particular location. Increasing income level is parallel by an upgrading in what are considered as essential. From the data that we obtain, we are able to identify the proportion of the income that is spent on the real estate consumption; hence it will indicate the demand of the residential unit.
- Distance between the house and work place:
Based on the survey done, the total of 38.67% of the respondents travel 11-20km daily to their work place, while 34.67% of the respondents travel 21-30km daily to get to the work. The number is followed by 16% of the respondents travel 31-40km daily to their work place. The remaining of 6.67% and 4% of the respondents travel to get to their workplace as far as 1-10km and 40km and above respectively. According to this study, distance is a major determinant for the respondents to decide whether or not to reside in the said area. Further analysis will be done in order to identify the correlation between the distance and the cost to travel to work.
- Transportation mode:
Majority of the respondents, according to this survey are using private as their transportation mode to get to other places. Meanwhile, totalled up of 29.33% of the respondents are using motorcycles as their mode of transportation. The remaining of 8% of the respondents is using public transportations to get to other places. The mode of transportation also plays a major determinant of the one's cost of transportation. Say, if a person using a motorcycle to move around, it will reduce the cost incurred. However factors such as family size and income will determine the mode of transportation they choose.
- Transportation costs:,/li>
Based on the bar chart above, the total of 49.33% of the respondents spent between RM101-RM200 per month for the transportation cost and followed by 29.33% of the respondents spent RM201-RM300 monthly for travelling expenses which includes petrol. The remaining 17.33% of the respondents spent below RM100 for the travelling expenses monthly and the minority group of 4% spent more than RM300 monthly for the transportation. The cost will rely mostly on the distance travelled and the type of transportation they are using.
- Toll expenditure:
The graph shows that more than half of the respondents, which is 58.67% spent less than RM100 per month for toll and followed by 36% of the respondents spent between RM101-RM200 monthly for toll. Meanwhile, the remaining of 5.33% of the respondents spent in between RM201-RM300 per month for toll. In order to minimise their expenditure, half of the respondents only pay less than RM100 per month for toll, and use other alternatives road without having to pay for toll.
- Purpose of travel besides working:
Based on the pie chart above, the population of Bandar Saujana Putra who took part in this survey go on a travel for family matter besides working are totalled up to 46.6.7% and followed by choosing to travel for leisure with the amount of 36% of the respondents. Meanwhile, the remaining of 17.33% of the respondents chooses to travel because of other commitment such as healthcare matters, education and etc.
- Travelling frequency (besides working) in weekly basis:
According to the graph above 40% of the respondents travel other than goes for work three times weekly, followed by 37.33% of the respondents travel for other means four times weekly. Then 10.67% of the respondents travel two times weekly for other purpose than work, then 9.33% travel more, which is five times weekly and the remaining of 2.67% of the respondents choose to travel once every week for other purpose than working. A lot of factors can be considered when deciding to travel for other means, however, it is identified that the main drive of the decision to travel other than working is income. Higher income group of people are usually more convenient to travel for other means as they have extra income to spend on.
- Transportation cost for travelling purpose (besides working):
Based on the graph above, 56% of the respondents spent RM101-RM200 monthly for the travelling purpose other than working, followed by 33.33% spent more which is RM201-RM300 monthly for other purpose than working. The remaining 8% and 2.67% of the respondents spent more than RM301 and below RM100 per month respectively. As mentioned earlier, higher income earner usually spent more on travelling besides going to work, and based on the analysis earlier, more than half of the household who took part in this survey earning in between RM3000-RM5000.
- Housing Cost and Transportation Cost:
Based on the graph above, the total of 49.33% of the respondents considered that the money they spent on housing cost monthly worth the money spent on transport cost. It means that the proportion of the household income they earned monthly is balance between the biggest expenditure they incur monthly, which are housing cost and transportation cost. The remaining of 33.33% of the respondents however think that the money they spent on transportation cost is not worth compared to housing cost they paid monthly. For instance, this group of respondents think that they paid a high sum of money for the house they occupy in Bandar Saujana Putra, but still, they have to spend more on transportation. The group of 17.33% of the respondents however, think that the balance between the stwo expenditure is neutral.
- Factor on how much spent for transportation cost:
This analysis shows that 45.33% of the respondents consider monthly household income as the main factors contributing on how much they spent on transport cost, meaning that their income determine how far their preference can be indulged in terms of travelling. The second biggest group consist of 32% of the respondents think that distance to work place is the main factor towards the amount of money they spent on transportation cost. From the analysis, it shows that this group of people are mostly middle to lower income earner because they tend to make decision based on the important factor such as work rather than travelling for other purpose.
The remaining of 17.33% and 5.33% of the respondents suggested that the most important factors that determine how much money they spent on transport are frequency of travelling and travelling for other purpose besides working.
- Housing cost factor in determining housing location:
Housing cost is definitely one of the most important factors influencing residential demand and creates buyers intention before they made up decision to own a house in a particular location. From the bar graph above, majority of 60% of the respondents agree that housing cost is an important factor in determining their decision to occupy a particular residential unit, while 32% of the respondents think that cost is a very important factor. Meanwhile, the remaining of 8% from the respondents does not think housing cost is an important factor to make a decision in regards of occupying a residential unit.
- Transportation cost factor in determining housing location:
Transportation cost supposes to be the second biggest issue in determining a particular location to reside. Most of the household spent a lot of money to the two factors mentioned before. It is proved by the survey done where 62.67% of the respondents think that transportation cost incurred when living in a particular location. The figure is followed by 26.67% of the respondents think that transportation cost is a very important factor in arriving to their decision about a particular location. Meanwhile, only the minority group of 10.67% of the respondents does not think that transportation cost is important when they decide to live in Bandar Saujana Putra.
- Traffic congestion factor in determining housing location:
Based on the location and the accessibility of Bandar Saujana Putra, it is located outside the traffic congested area, hence most of the respondents suggested that traffic factor does not effects their decision in choosing location for their house. The remaining of 8% of the respondent considers traffic problem as not important whereas a minority group of 4% of the respondents think that traffic congested is highly important.
- Education factor in determining housing location:
Since Bandar Saujana Putra has been a preferred choice by the working families to reside, more than 26.67% of the respondents considered education for their children is an important factor in determining housing location, whereas majority of 53.33% of the respondents suggested that education is not even a factor in determining housing location due to the paying ability of the family to send their kids to school which are not in the neighbourhood. The remaining minority group of 18.67% and 1.33% of the respondents suggested that children education factor is not important and very important respectively.
- Surrounding factor in determining housing location:
Surrounding plays and important roles in determining the location of the house they want to occupy. The totalled of 44% of the respondents considered surrounding factor as both important and neutral when deciding the location of their house. The remaining of 6.67% of the respondents disregard the surrounding factor and the rest of 5.33% of the respondents considered surrounding as a very important factor in determining the location.
- Correlation between monthly loan repayment and distance travel:
According to the survey, there are 5.3% of the respondents who paid the housing cost between RM1201-RM1400 travels to the nearest distance of between 1-10km. From Bandar Saujana Putra, one likely to work in Putra Heights, Dengkil and Shah Alam which are located merely 10 km away via ELITE Highway. The group travelling between the distances of 11-20 km to work place consist of 66.7% of respondents who paid RM700-RM1000 for monthly loan repayment, 57.9% who paid RM1001-RM1200 monthly for their house and 36.8% of respondents who paid between RM1201-RM1400. According to the observation, employment centres which are likely located within the distance of 11-20 km away from Bandar Saujana Putra are Putrajaya, Cyberjaya, Kuala Lumpur International Airport (KLIA), Bandar Sunway and Petaling Jaya.
For the traveller within the distance of 21-30 km to the workplace, it consist of 33.33% of respondents coming from the group who paid housing cost of RM700-RM1000 monthly, followed by 26.3% of respondents who paid RM1001-RM1200 monthly for house. The next group who travel between 21-30 km to their work place, is from the group of respondents who paid between RM1201-RM1400 monthly for their house which totalled up to 42.1%, followed by 42.9% of the respondents who paid between RM1401-RM1600 and 100% of respondents who paid monthly loan repayment of between RM1601 and above. Employment centres which are likely located within 21-30 km away from Bandar Saujana Putra are Kuala Lumpur City Centre, Ampang, Nilai, Gombak and just to name a few.
Going further, the total of 19.6% of the respondents is travelling within the distance of 31-40km away from study area to get to their work place. From that amount, it consist of 10.5% of the respondents who paid between RM1001-RM1200 monthly for their house, followed by 15,8% of the respondents who paid in between RM1201-RM1400 for the monthly loan repayment. The total group of 42.9% of the respondents who paid RM1401-RM1600 monthly for the house also travel within the distance of 31-40km to get to the work. The employment centres which are located within 31-40km away from study area are Seremban and just name a few.
Only minority group of 5.4% of the total respondents travel to work more than 40 km daily to get to work. This group consist of 5.3% of the respondents who paid for the house RM1001-RM1200 monthly and followed by 14.3% of respondents who paid RM1401-RM1600 monthly for loan repayment for the house.
- Correlation between monthly rental and distance travelled:
According to the bar graph above, it shows that 50% of the respondents who paid monthly rental of RM500-RM700 travelled daily to work within the distance of 1-10km, followed by 16.7% of the respondents who paid in between RM701-RM900 travelled within the same distance to their work place. Moving further from the study area, 50% of the respondents who paid monthly rental of RM500-RM700 travel to work within the distance of 11-20km, followed by 41.7% of the respondents who paid monthly rental of RM701-RM900 travel to work within the same distance. The total of 66.7% of the respondents who paid RM901-RM1100 monthly for the house also travel to work within the distance of 11-20km daily.
The total of 41.7% of the respondents who paid monthly rental of RM701-RM900 travel within the distance of 21-30km daily to their work place. The remaining of 33.3% of the respondent who paid monthly rental of RM901-RM1100 travel further, which is 30-40 km daily to their respective work place.
- Correlation between monthly loan repayment and transportation cost:
According to the graph above, 33.33% of the respondents who paid RM700-RM1000 monthly for their housing loan repayment spent below RM100 monthly for the transportation cost to work. The number is followed by 21.1% of the respondents who paid monthly loan repayment of RM1001-RM1200 spent less than RM100 per month for their transportation cost.
Meanwhile, for the group of respondents who spent RM101-RM200 per month for transportation cost consist of 66.7% from the group of respondent who paid monthly loan repayment of RM700-RM1000, followed by 47.4% of the respondents who paid monthly instalment of RM1001-RM1200. The graph also shows that 63.2% of the respondents who paid monthly instalment of RM1201-RM1400 for their house also spent between RM101-RM200 on transportation cost to their work place. For the respondents who paid monthly instalment of RM1401-RM1600, the total of 35.7% of them spent between this ranges on transport, followed by 100% of the respondents who paid more than RM1600 monthly for housing loan.
For the next analysis, it shows pattern that 31.6% of the respondents who paid monthly loan repayment of RM1001-RM1200 for their housing mortgage spent on transport in the range of RM201-RM300 monthly followed by 26.3% of respondents who paid RM1201-RM1400 monthly for their house and the remaining of 50% of the respondents who paid RM1401-RM1600 for their housing loan also spent on transport for the same amount.
- The last group in the analysis is the one who spent the most in transportation cost, which is between RM301-RM400 per month to get to work. It consists of 5.3% of the respondent who paid for their house of RM1201-RM1400, followed by 14.3% of the respondents who paid monthly instalment of RM1401-RM1600.
However, distance is not the only factor determining the transportation cost incurred by the respondents. There are crucial factors such as the mode of transportation they used, i.e., public transportation usually cost lower than private cars. Factors such as the frequency of travelling and petrol price also play determinant in transportation cost.
- Correlation between monthly rental and transportation cost:
According to the bar graph above, the total of 75% of the respondents who paid monthly rental of RM500-RM700 spent less than RM100 monthly on transportation cost, followed by 33.3% of the respondents who paid monthly rental of RM701-RM900. For the group of respondents who spent between RM101-RM200 monthly for transportation cost, it consists of 25% of the respondents who paid rental of RM500-RM700, 33.3% of the respondents who paid RM701-RM900 on their house rent and lastly the group of 100% of the respondents who paid between RM901-RM1100 for their house. The last group of 33.3% of the respondents who paid RM701-RM900 monthly for rent spent the most on transportation cost which is RM201-RM300.
This chapter is about findings, analysis and discussions of the data collected throughout the survey. From all the graphs above, it has discussed the pattern of housing location in regards of the transportation cost.
The following chapter will discuss about the conclusions from the analysis of this study. Then, recommendations are being made for the future research to improve this study.
CONCLUSIONS AND RECOMMENDATIONS:
This chapter will summarise
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