Rental House Price Determinants and Affordability in Hawassa City, Ethiopia

Abstract

This study examined rental house price determinants and affordability problem in Hawassa city. To achieve the intended objective, the study used cross-sectional data obtained from 190 sample selected from 3 sub-cities in Hawassa city. To identify the major determinants of rental price and affordability, Ordinary Least Square (OLS) method is adopted. In addition, the shelter-poverty approach is applied to measure the affordability problem in the study area. The regression result for determinants of rental price indicates that number of rooms, the total area occupied by the house, public transport availability, health center availability and housing typology are positively and significantly affect therental price. Among the affordability problem regressors, floor area of the house, migration status of the household head and house typology are positively and significantly influence affordability in Hawassa city. Whereas, dependency ratio of the household has negatively significant impact on affordability problem. With regard to the shelter poverty level of the households, 76.8 percent are shelter-poor (i.e. could not meet their basic non-housing needs such as food, clothing, health care, and transport at some minimal level of adequacy after paying for house rent) and the remaining 23.2% are non-shelter poor. Based on the findings, this study recommends that the provision of publicly owned rental houses that have been started by Addis Ababa City housing agency has to be strengthen and adopted by other cities of the country. In addition, the government has to apply rent-regulation schemes to stabilize the current unbearable rental price.

Keywords: Affordability, Housing Price, Rental Houses, Shelter Poverty