Optimal Cost–Quality Trade-Off Model for Differentiating Presale Housing Quality Strategies

Yi-Kai Juan and I-Chieh Lin
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Yi-Kai Juan: Department of Architecture, National Taiwan University of Science and Technology, Taipei 10607, Taiwan
I-Chieh Lin: Department of Architecture, National Taiwan University of Science and Technology, Taipei 10607, Taiwan

Sustainability, 2018, vol. 10, issue 3, 1-17

Abstract: Housing quality (HQ) has been a long-standing concern for both developers and homebuyers. Currently, HQ depends on the expected profit and subjectivity of the developers, and homebuyers only have a passive choice of whether to accept housing with such quality. Asian housing supply markets have largely adopted the presale housing system. Under this system, developers are able to verify future occupants before commencing construction, enabling them to provide customized designs and differentiated quality items in order to meet user demands and value. Consequently, HQ can be enhanced. A cost–quality trade-off model was developed using a genetic algorithm to help decision-makers identify the optimal HQ differentiation strategy that simultaneously satisfies homebuyers’ expectations of quality and developers’ expectations of profits. The findings showed that the presale housing system effectively improves HQ. A 6% increase in homebuyers’ budgets can achieve the optimal quality improvement effect, while an 8% or more increase in developers’ construction costs in order to improve HQ can generate an additional premium for the developers.

Keywords: cost–quality trade-off; differentiation strategies; housing quality; presale housing; genetic algorithm (GA) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
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