How does Southeast Asian Cultural Background Affect House Purchase Decision in Australia?

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23/09/19 Property Reference this

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RESEARCH PROPOSAL

WORKING TITLE

How does Southeast Asian Cultural Background Affect House Purchase Decision in Australia?

RESEARCH QUESTION AND INDUSTRY PROBLEM [20%*]

 

MAIN QUESTION

How does Southeast Asian Cultural Background Affect House Purchase Decision in Australia?

SUB-QU 1

What are the criteria for Southeast Asia countries when they are purchasing properties in Australia?

SUB-QU 2

What are the cultural-related factors, their ranking and where do they come from?

SUB-QU 3

How do these cultural factors influence Southeast Asian buyers’ decisions when choosing to buy a property in Australia?

Australia is a multicultural and developed country. With the increasing number of immigrants, Australia has formed its own unique culture and embraced the culture of many different countries. It is believed that the increase in population has not only brought new impetus to social progress, but also stimulated local economy and increase employment opportunities. Among all these factors, what cannot be ignored is the need for immigrants to find a place to settle down, which means purchase a property in Australia. According to ABS, in 2016-17, net overseas migration (NOM) figure reaches 262,500 persons, which is 27.3% (56,300) more than in 2015-16.

Since Australia is a safe country and Melbourne has been rated as the most liveable city in several years, this feature has attracted foreign investments and foreigners coming all the way to settle in Australia, and people coming from Southeast Asian countries are not an exception. With the Australia’s stable economy environment and beneficial government investment policies, more and more overseas investments has been attracted, and among them, property investments have taken up a larger increasing proportion. According to the annual report 2017-2018 from foreign investment review board (FIRB), the leading two countries are USA and China for foreign investments and in real-estate industry, China invested $12,667.7 million in this past financial year, which is the biggest percentage in this sector. Meanwhile, the social conflict occurred in relation to the house price drivers, cultural factors such as Fengshui, superstition of numbers, morality information, religion and other cultural factors are playing roles towards property acquisitions nowadays in Australia. As a result, a large number of investors are from overseas, and among them, Southeast Asian country purchasers are occupying larger percentage. This article will mainly focus on Southeast Asian backgrounds. According to the geography area, Southeast Asian countries include Singapore, Philippian, Thailand, Indonesia, Malaysia, Hong Kong and mainland China (Wikipedia, Southeast Asian). This article will mainly focus on the following countries: Singapore, Indonesia, Malaysia, Hong Kong and mainland china. It is mainly based on the above countries as illustrated examples, and trying to find the correlation between cultural factors and property purchase decision factors. It will also demonstrate how and to what extent cultural factors would affect people from Southeast Asia buying properties in Australia.

From a broad perspective, culture is referring to the general form of material and spiritual wealth created in the historical practice of human society. Narrowing it down, it is a form of social ideology and behaviour, including belief, art, law, ethics, religion, social customs, and so on (Gibler, Karen M, Nelson, Susan L 2003).This paper examines on the behaviour of culture that has led to housing purchase decisions because of the influence of customs, as well as the impact extent of culture on housing purchase decision-making. According to Gibler, Karen M, Nelson, Susan L (2003), subculture is often a mode of life that includes both values ​​and concepts shared with the main culture, as well as its own unique characteristics. It affects the thoughts and behaviours of people in a direct way. To make this article more objective, lots of literature review were conducted and it is found that most research papers in recent years only focus on the analysis of the rational factors when buying a property, and the published researches are mainly talking about consumers’ culture-related behaviours in a general sense(Gibler, Karen M, Nelson, Susan L 2003).It is noted that the research gap is that not many paper has investigated the relationship between the systematic cultural background and house purchase decision from Southeast Asian backgrounds in Australia in the last decades. This research is to provide new insights towards customer behaviour in terms of property purchase. Secondly, it will identify and investigate the correlation between cultural backgrounds and property purchase decision in Australia for people from Southeast Asian.

By detailing the main question into three sub questions, the first element in this article that will be discussed is what criteria Southeast Asians will consider when buying a home in Australia. After discussing these factors and conditions, and then it will extend to what cultural factors are among all these criteria and where are they coming from. Finally, it will further explore the correlation of these two variables and to quantify the extent that cultural factors influencing the decision of people from Southeast Asia backgrounds to buy a property in Australia.

Researching this problem would have its significance in the real estate industry. It can help marketers to better understand the factors behind the buying behaviour patterns of real estate consumers, and can guide the proportion of cultural factors in the decision-making process of consumers. This will also provide developers with better market information, allowing them to consider these irrational factors more in the future, enabling marketers to influence consumers with more targeted marketing methods, and thereby increasing sales performance and maximize profit. In the long run, if the finding factors are an important factor, then it can guide developers to take these factors into account when designing the project which better meets the needs and requirements of the market, which means they can accurately identify the target customers and decisively determine their location of construction, layout of projects and marketing campaign points. Moreover, it can have a certain impact on the Australian residential culture as well. The developers and real estate agents will need to understand property buyers’ purchasing behaviours across different cultural backgrounds in order to provide them with the property or services to meet their preferences. This will ensure a sustainable and attractive market, especially for foreign buyers.

LITERATURE REVIEW [40%*]

 

CRITERIA FOR SOUTHEAST ASIAN COUNTRIES WHEN THEY ARE PURCHASING PROPERTIES IN AUSTRALIA

According to Wu and Teng (2011), it found out when customers plan to purchase a particular product or service, they will need to aim for a purchase intention. The same principle could be applied to house purchases, it noted both purchase intention and decisions are two important phases and they have direct links between two factors (Ajzen, 1991; Han and Kim, 2010; Kunshan and Yiman, 2011). They are providing the behavioural proof to prove that the purchase decisions are sometimes involve many factors and not only limited to the factual and objective factors. Property purchase is a big decision and several important factors would need to be considered and compared before making this final decision.

Getting to know the intention for decision of property is not adequate, then the articles relating to property purchase factors are shedding lights on the topic. There are several house features would have impact on property purchase decision and they are the design of the property, internal and external designs, finishing and quality of the building (Adair et al., 1996; Daly et al.. 2003; Sengul, Yasemin and Eda, 2010; Opuku and Abdul-Muhmin, 2010). These findings can provide evidence on objective factors when people purchasing properties. Apart from that, based on these findings, another article illustrates the factors for Southeast Asian countries when purchasing properties and it took Malaysia as an example, the conclusion demonstrates that five variables are the most important factors among seven factors in terms of property purchase. They are finance, distance and accessibility, developer reputation, superstition (numbers and ghost), features of the property and spaces for living. (Chia, et. al, 2016). Relying on these findings, it is evident that when purchasing house in Australia, customers tend to focus on these attributes and compare the results with their intentions so that to rank them based on their priorities, which lead to property purchase in the end.

Several past studies found that the financing information is the most significant factor and could have major impact on how people would make the decision for house purchase (Adair et al., 1996; Daly et al., 2003; Kaynak and Stevenson, 2007; Sengul et al. 2010; Xiao and Tan, 2007). In the context of Malaysia, the study by Razak, Ibrahim, Hoo, Osman and Alias (2013) proved that financial consideration, especially property price, has a very strong impact on house purchase intention. Adullah et al (2012) states that there are similar criteria when purchasing a property in Malaysia which include property location, internal design, developer brand and family life-cycle stages.

These findings could provide some research evidence towards the factors affecting property purchase decision in Australia for Southeast Asians. Further literature review would carried towards the other two questions as follows.

CULTURAL RELATED FACTORS RANKING AND REASONS

From the empirical studies, it is observed that Chinese tend to be easily affected by group decision and morality information than American when making property value judgements (Justin D& Kaiping 2007). This means that Chinese people can be easily impacted by group decision and would like to follow other groups’ behaviours. For example, if relatives purchase properties in a particular area or due to school zone, the people in the same family hood would like to share the news and follow the trend. This is also a psychological phenomenon that people tend to follow the trend as they do not wish to be isolated from the society rather than making a rational decision. They also tend to focus more on the reputation of the builders or companies rather than looking at the real quality.

According to Sia et al, 2018, it illustrates that Fengshui has been ranked as the third important factor by Malaysian Chinese in terms of property purchase decision. The reasons behind it is people believe Fengshui affecting luck and fortune and have better commercial value. Fortin, Hill and Huang (2014) of the University of British Columbia carried out a study on the effect of superstition in the Housing Market. Some interesting facts are being drawn from the study and it provided the evidence that beliefs of Chinese superstitious can have significant impact on house prices in a North American market with a large Chinese immigrant population. They also noticed that if the property address contains number four, the sale price would be lower and it turns out about 2.2 percent lower than other similar properties in the area. In the opposite, they found those houses which has number eight as an ending number in the address could sold higher than other addresses. Similarly, this phenomenon is also evident in neighbourhoods with a higher than average percentage of Chinese residents. The reasons behind them are because in Southeast Asian culture, number four is the same pronunciation of death in that language and people are trying to avoid having bad lucky numbers in their property address and number eight means fortune and could bring fortune to people’s health and life. These old traditional beliefs are from ancient history and are carrying on from generations to generations. When these immigrants come to Australia to settle down, they would bring their culture and can be reflected on the property purchase decision process.

According to academic literatures, other research methods have been conducted with regards to understanding the influences of property purchase behaviour in Southeast Asian culture. The second cultural factor is sense of belongings, which means property ownership concept.

Cross-cultural difference affects the way people estimate financial value of objects. Namely, Southeast Asians are more likely to desire to have ownership of a property as an asset, whilst western people may only desire a property as a place to live (Justin 2007). The reasons behind it is the desire for ownership and society environments. In Southeast Asian culture, people tend to own a place rather than renting and if they have the ability to afford, they tend to buy the property. For example, in ancient history in china, the lands and property are owned rather than rented and from one generation to next generation, the same principles were carried and been educated to their younger generations. People from this culture tend to think owning property is equal to have their own home and renting is not as renting could not provide the psychological security to them and could not provide sense of belongings to them.

Furthermore, housing ownership is an important indicator for social sustainability in Chinese context as well (Xiao et al. 2016). In terms of sustainability, people owning property tend to have more responsibility and would help with society progression.

CORRELATION BETWEEN CULTURAL FACTORS AND PRPERTY PURCHASE DECISION IN AUSTRALIAC FOR SOUTHEAST ASIAN BACKGOUNDS PURCHASERS

According to Tunkkari (2017), culture and consumer behaviour come together in a way that products and services meeting the priorities of a culture are more likely to be favoured and accepted by consumers. Which means when consumer making purchase decisions, if they have cultural factors which meet their priorities, they tend to make the purchase more easily.

According to Francis, Koske, Elizabeth, Makokha and Gregory S.Namusonge (2016), a research survey has been conducted to identify the correlation between social-cultural effects and real estate decision. They use a questionnaire to reach 1200 landlord in Kisumu city, Africa. The data gives an insight that the social factors play a significant role on real estate purchase. As this literature is more to a case study research and it helps for us to refer to the methodology and methods used for us to help with our data collection and research process.

According to Dallas Rogers, Alexandra Wong & Jacqueline Nelson (2017), more chinese investments are involving in Australia and Sydney is an example, but with the lack of support and government policies in the field, foreign investments are facing difficulties for being regulated. However, this can oppositely prove that the foreign investments are happening even though lacking of policies and support from governments.

SUMMARY

Based on the reports analysed so far, there are evidences show that cultural background is impacting consumer purchase behaviour in the realestate market.

RESEARCH DESIGN [20%*]

 

RESEARCH METHODOLOGY

The research methods using are mainly quantitative methodology as the main research method, while qualitative analysis is the supplementary research method. First method will be used is the online self-completion questionnaire (SCQ) to investigate the criteria or factors that would attribute to property purchase for Southeast Asian owners, among the questionnaires, it will provide different weights towards the ranking factor as well. Based on the information and response from the SCQ, these data can be transformed by ways of graphs and charts, then using the software of IBM SPSS and linear regression, the correlation could be found to identify the relationship between the two variables to further determine the quantitative impact of cultural factors on the purchase of the house. The second method will be used is focus group and semi-structured interview as supplementary methods. In addition, secondary data will be getting as well as supporting evidence.

RESEARCH METHODS AND DATA SOURCES

Self-completion questionnaires-SCQ

The research will first use online self-completion questionnaire (SCQ) to investigate the property purchase factors .The main method for collecting data would be using close ended questions for SCQ and work with southeast Asian real estate agencies, such as Colliers, JLL, and ask them to help to send out the questionnaires to their database purchaser clients. The questionnaire will be carried out within 5 countries and each country would have 200 copies. Among all the factors which include cultural factors, it will ask the respondents to select those factors attributing for property purchase decision in Australia and then among all the factors selected, ranking those factors from 1-5 from least important, not very important, important, quite important to most important for those factors. It will be conducted by way of email questionnaire and will involve minimal costs. The expected time frame is about one to three months as sometimes it will take longer time for respondents to respond. The strength of this method is quick, with minimal costs involved and can provide greater anonymity. However, limitations would be the questions will be more abstractive and respondents might have different views on culture which may affect result analysis. After receiving the information from the questionnaire, the data will be transformed into Excel and graphs. Although the SCQ may be a not very deep data collection method but the information can reveal the ranking weights towards cultural factors. Then the variables can be displayed on a XY charts and then using the IBM SPSS software and Excel Linear Regression tool to identify the quantitative relationship between two variables. The method in the end can be summarized as a formula and bring up the correlation figure. Based on the figure and the sign for correlation, it can tell the relationship. If the correlation is positive, which means an increasing relationship for the variables, and vice versa. Besides, if the absolute figure is close towards one, which means a stronger relationship between the cultural factors and the property purchase decision.

Focus group and semi-structured interviews

Focus group is expected to last for one week and will involve certain costs to pay for participants. The data looking for is consensus that is agreed by all participants, namely, textual data. It will be carried out via open-ended question, bring up cultural factor one by one and seek for where does it come from, then observe and record the information getting from focus group.  It will invite sociologist, economist, historian, developer, buyer to attend the focus group and these participants are with expertise. The analysing tool would be transcription and analysis of the arguments. The strength is that it can be used as a backup method to supplement literature review, but the shortcoming is that the result can be affected by other respondents’ review significantly. It is expected that the potential outcome will be the consensus that agreed in the focus group should be in line with relevant journal articles.

Semi-structured interview is another supplementary method and it will take about 15 days, it will need to pay to the participants with an hourly rate of $20 and it is expected to invite 30 potential buyers by way of interviewing the owners from Southeast Asian backgrounds with open and closed questions. Each session will run about 20 minutes for one person. The information received will be mainly the transcription from the interviewees. For open ended question answers, the data can be analysed to check if it will in line with relevant journal articles or not. For close ended questions, the data can be transformed into graphs which are easier to comprehend. The strength is to increase the chance of successful data collection and improve the accuracy of data. However, the limitations would be time wasting and difficult to replicate. Potential outcome will be to verify and support the data gathered from quantitative method and providing qualitative evidence.

Secondary data

This paper will also be looking at some secondary data as supporting information, it is expected to look at the foreign investments review board annual report 2017-2018 financial year. It will mainly focus on the amount of dollar invested in real estate industry and the country sources. According to the annual report 2017-2018, the leasing two countries are USA and China for foreign investments and in real-estate industry, China invested $12,667.7 million in this past financial year, which is the biggest percentage in this sector. It on the other side would support the main question in this topic. The data could only be a supporting data, although they are factual numbers, they still have limitations to provide evidence directly.

CONSLUSION

Based on the literature findings at this stage and the expected research design methods, it is expected that the findings will show a positive strong correlation between cultural background and property purchase decisions. Consequently, this hypothesis will be tested in the Australian property market for people from Southeast Asian backgrounds and it is important to understand its implications.

REFERENCES

 

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