Correlation Analysis of Factors Affecting the Prediction of Price of Terrace Houses in Penang, Malaysia: A Case Study

Abstract

Buying a house with a competitive price is difficult for many individuals due to various reasons. One of the reasons is the value of the house is influenced by many factors. Hence, it is crucial to study the relationship between house features and house prices for the prediction of the house price. Different house features may influence house prices either increasing or decreasing. This research aims to identify the house attributes that affect the prediction of the price of terrace houses in Penang, Malaysia using 2,699 sub-sale terrace houses actual property transactions from January 2018 to December 2019. This data is provided by the Valuation and Property Service Department of Penang. These attributes are identified through the correlation analysis conducted. Five attributes are highly correlated with house price; the size of the house (‘Built_Up’), the price per square feet (‘Price_Psf’), the number of floors (‘Floors’), the number of rooms (‘Rooms’), and the location (‘Location_NE’). Size (‘Built_Up’) has the strongest relationship with price. Furthermore, this study has found that house price is not associated with its type. It has also revealed that the terrace houses located in South Seberang Perai and Central Seberang Perai are cheaper than the ones in other parts of Penang. The findings would assist buyers, investors, or homeowners in making decisions and in strategizing for purchasing or selling properties.