Behavioural Economics on Investment Decision towards Property Market in the Iskandar Zone, Malaysia

Lee, Sook Yen (2024) Behavioural Economics on Investment Decision towards Property Market in the Iskandar Zone, Malaysia. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

Text 67. Lee Sook Yen (MEC).pdf Restricted to Registered users only Download (2MB)

Abstract

House prices in Iskandar zone Malaysia are unaffordable while the supply of high-end residential properties continues to increase. Given this rare situation, it is noteworthy to investigate the causes (e.g., irrational investment) of these new launches to skew towards an unaffordable range. Thus, it is important to empirically validate the impact of behavioural bias on the Iskandar zone’s residential property market investment decision based on the Cumulative Prospect Theory and Theory of Planned Behaviour (TPB). In view of the above, this study aims to examine the relationship between behavioural bias (i.e., risk-seeking, loss aversion, overconfidence and herding effect) and property investment decisions in the Iskandar zone. Moreover, this research aims to evaluate the impact of external factors (i.e., economic expectation, Overnight Policy Rate and return on investment), the mediating effect of TPB and the moderating effect of gender on the relationship between behavioural bias and property investment decisions. Quantitative research was adopted to provide empirical evidence on the association between variables using hypothesis testing. The empirical results revealed that behavioural bias was significantly related to property investment decision behaviour, except for the herding effect. Meanwhile, external factors were positively related to property investment decision behaviour. Additionally, TPB elements were found to have a partial mediating impact on the relationship, except for the subjective norm. Moreover, gender significantly moderated the relationship between risk-seeking and property investment decision behaviour. The findings revealed that the effect of high risk-seeking in nurturing property investment decision behaviour was more pronounced in males. Summarily, the significance of this study lies in the discovery of behavioural bias as a key indicator for future decision-making models