Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City

Tamirat Mekonnen Mekuria; Seid Hussen Yimam; Yohans Teshome Negashi

doi:doi:10.11648/j.ijber.20241303.11

Research Article |

| Peer-Reviewed

Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City

Tamirat Mekonnen Mekuria^*

, Seid Hussen Yimam

, Yohans Teshome Negashi

Published in International Journal of Business and Economics Research (Volume 13, Issue 3)

Received: 14 April 2024 Accepted: 6 May 2024 Published: 24 May 2024

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The Ethiopian real estate industry has grown in the previous two decades, especially in the capital city of the country and regional capitals, including Bahir Dar. Real estate prices have doubled and even tripled in a few years because of different factors. Thus, the purpose of this study is to analyse the factors affecting residential real estate prices in Ethiopia, particularly in Bahir Dar City. For this purpose, the study used both purposive and stratified random sampling techniques. Descriptive and inferential statistics were used to analyze the data, and the ordinary least squares method was used to identify the factors that influence residential real estate prices. The hedonic regression model result reveals that R² statistics (0.880) indicate that 88% of the variation in residential real estate prices can be explained by variation in the independent variables. Hedonic regression model results revealed that plot size, floor area, number of rooms, age of the house, external wall finishing material, ceiling finishing material, the direction of the house, distance of the property from the main road, and involvement of brokers in the transaction process, were major micro-factors that had a significant effect on residential real estate prices at the 5% level of significance. Furthermore, the interview results show that the challenges faced by real estate developers mostly include loans and aid issues, high-interest rates, mortgage restrictions, the financial capacity of real estate companies, delays in plan approvals, and rising costs of construction materials are among the major challenges affecting investment in real estate. The study suggests that the municipality of Bahir Dar City should provide an adequate supply of land to real estate developers, improve infrastructure development, and federal and regional governments should provide the credit lending mechanism by lowering interest rate especially for low-income class.

Published in	International Journal of Business and Economics Research (Volume 13, Issue 3)
DOI	10.11648/j.ijber.20241303.11
Page(s)	46-63
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Hedonic Regression Model, Micro-Factors, Property Prices, Residential Real Estate

References

[1]	AQUBAMICHEAL, K. 2009. Factors affecting the real estate market: the case of Addis Ababa city. Unpublished M. SC, Addis Ababa University, Ethiopia.
[2]	ASSEFA, E. 2017. PERCEPTION ON FACTORS AFFECTING REAL ESTATE PRICE IN ADDIS ABABA CITY ADMINISTRATION. St. Mary's University.
[3]	BOROWIECKI, K. J. 2009. The determinants of house prices and construction: an empirical investigation of the Swiss housing economy. International Real Estate Review, 12, 193-220.
[4]	CORTESI, G. 2003. Mastering real estate principles, Dearborn Real Estate.
[5]	CRESWELL, J. W., PLANO CLARK, V. L., GUTMANN, M. L. & HANSON, W. E. 2003. Advanced mixed methods research designs. Handbook of mixed methods in social and behavioral research, 209, 209-240.
[6]	DENSCOMBE, M. 2008. Communities of practice: A research paradigm for the mixed methods approach. Journal of mixed methods research, 2, 270-283.
[7]	DUENWALD, C. 2000. Property Prices and Speculative Bubbles: Evidence from Hong Kong SAR. IMF Working Papers, 2000.
[8]	DURBIN, J. & WATSON, G. S. 1971. Testing for serial correlation in least squares regression. III. Biometrika, 58, 1-19.
[9]	DZANGMAH, H. T. 2012. Prospects and challenges of rental housing in greater Accra region.
[10]	FIDELL, L. S. & TABACHNICK, B. G. 2003. Preparatory data analysis. Handbook of psychology: Research methods in psychology, 2, 115-141.
[11]	GILBERT, A. 2003. Rental housing: An essential option for the urban poor in developing countries, Un-habitat.
[12]	HARVEY, J. & HARVEY, J. 1981. The Pricing of Land and Land Resources. The Economics of Real Property, 30-42.
[13]	HESSELING, R. 1994. Displacement: A review of the empirical literature. Crime prevention studies, 3, 97-230.
[14]	HILBERS, P., LEI, Q. & STAUSHOLM ZACHO, L. 2001. Real estate market developments and financial sector soundness.
[15]	IMAN, A. H. M. 2006. Basic Aspects of Property Market Research, Penerbit UTM.
[16]	KAMAU, M. G. 2011. Our Whole Life Is Our Whole Responsibility, Lulu. com.
[17]	KNEESHAW-PRICE, S. H., SAELENS, B. E., SALLIS, J. F., FRANK, L. D., GREMBOWSKI, D. E., HANNON, P. A., SMITH, N. L. & CHAN, K. G. 2015. Neighborhood crime-related safety and its relation to children’s physical activity. Journal of Urban Health, 92, 472-489.
[18]	KOTHARI, C. 2017. Research methodology methods and techniques by CR Kothari. Published by New Age International (P) Ltd., Publishers, 91.
[19]	MANKIW, N. G. 1998. Principles of Economics: Wall Street Journal Edition, Harcourt College.
[20]	MASLOW, A. H. 1943. Conflict, frustration, and the theory of threat. The Journal of Abnormal and Social Psychology, 38, 81.
[21]	MATHENGE, R. W. 2017. Effects of Money Supply on Residential Real Estate Pricing in Nairobi County. University of Nairobi.
[22]	MAVRODIY, A. 2005. Factor analysis of real estate prices. Kyiv: National University.
[23]	MILES, M. B. & HUBERMAN, A. M. 1994. Qualitative data analysis: An expanded sourcebook, sage.
[24]	NANCE, C. P. 2003. Modern real estate practice in Texas, Dearborn Real Estate.
[25]	NEGASH, Z. S. 2010. Modeling Hedonik Real Estate Price for Small Family Houses in Addis Ababa. Division of Building and Real Estate Economics Department of Real Estate and Construction Management Royal Institute of Technology, Stockholm.
[26]	OWUSU-ANSAH, A. 2012. Examination of the determinants of housing values in urban Ghana and implications for policy makers. Journal of African Real Estate Research, 2, 58-85.
[27]	PAGLIARA, F., PRESTON, J. & SIMMONDS, D. 2010. Residential location choice: models and applications, Springer Science & Business Media.
[28]	PALLANT, J. 2020. SPSS survival manual: A step by step guide to data analysis using IBM SPSS, McGraw-Hill education (UK).
[29]	SHAPIRO, S. S. & WILK, M. B. 1965. An analysis of variance test for normality (complete samples). Biometrika, 52, 591-611.
[30]	SCHOBER, P., BOER, C. & SCHWARTE, L. A. 2018. Correlation coefficients: appropriate use and interpretation. Anesthesia & analgesia, 126, 1763-1768.
[31]	SEBSBE, G., MUHDIN, M. & SOLOMON, A. 2017. Rental house price determinants and affordability in Hawassa City, Ethiopia. Journal of Poverty, Investment and Development, 39, 42-52.
[32]	SETH, A. & RAGAB, A. 2012. Macroeconomic vulnerability in developing countries: Approaches and issues.
[33]	SHRESTHA, N. 2020. Detecting multicollinearity in regression analysis. American Journal of Applied Mathematics and Statistics, 8, 39-42.
[34]	TESFAYE, A. 2007. Problems and prospects of housing development in Ethiopia. Property Management, 25, 27-53.
[35]	WANDELER, D. Lessons from rental housing. International Symposium on Architecture and Housing Rights, held at the School for Architecture and Design, King Mongkut’s University of Technology Thonburi, Bangkok, 2006.
[36]	YAMANE, T. 1967. Problems to accompany" Statistics, an introductory analysis", Harper & Row.
[37]	ZENEBE, S. 2006. The Process and Determinants of Residential House Market in Addis Ababa. Addis Ababa University.

Cite This Article

Plain Text BibTeX RIS

APA Style

Mekuria, T. M., Yimam, S. H., Negashi, Y. T. (2024). Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. International Journal of Business and Economics Research, 13(3), 46-63. https://doi.org/10.11648/j.ijber.20241303.11

Copy | Download

ACS Style

Mekuria, T. M.; Yimam, S. H.; Negashi, Y. T. Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. Int. J. Bus. Econ. Res. 2024, 13(3), 46-63. doi: 10.11648/j.ijber.20241303.11

Copy | Download

AMA Style

Mekuria TM, Yimam SH, Negashi YT. Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. Int J Bus Econ Res. 2024;13(3):46-63. doi: 10.11648/j.ijber.20241303.11

Copy | Download

@article{10.11648/j.ijber.20241303.11,
  author = {Tamirat Mekonnen Mekuria and Seid Hussen Yimam and Yohans Teshome Negashi},
  title = {Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City
},
  journal = {International Journal of Business and Economics Research},
  volume = {13},
  number = {3},
  pages = {46-63},
  doi = {10.11648/j.ijber.20241303.11},
  url = {https://doi.org/10.11648/j.ijber.20241303.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20241303.11},
  abstract = {The Ethiopian real estate industry has grown in the previous two decades, especially in the capital city of the country and regional capitals, including Bahir Dar. Real estate prices have doubled and even tripled in a few years because of different factors. Thus, the purpose of this study is to analyse the factors affecting residential real estate prices in Ethiopia, particularly in Bahir Dar City. For this purpose, the study used both purposive and stratified random sampling techniques. Descriptive and inferential statistics were used to analyze the data, and the ordinary least squares method was used to identify the factors that influence residential real estate prices. The hedonic regression model result reveals that R2 statistics (0.880) indicate that 88% of the variation in residential real estate prices can be explained by variation in the independent variables. Hedonic regression model results revealed that plot size, floor area, number of rooms, age of the house, external wall finishing material, ceiling finishing material, the direction of the house, distance of the property from the main road, and involvement of brokers in the transaction process, were major micro-factors that had a significant effect on residential real estate prices at the 5% level of significance. Furthermore, the interview results show that the challenges faced by real estate developers mostly include loans and aid issues, high-interest rates, mortgage restrictions, the financial capacity of real estate companies, delays in plan approvals, and rising costs of construction materials are among the major challenges affecting investment in real estate. The study suggests that the municipality of Bahir Dar City should provide an adequate supply of land to real estate developers, improve infrastructure development, and federal and regional governments should provide the credit lending mechanism by lowering interest rate especially for low-income class.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City

AU  - Tamirat Mekonnen Mekuria
AU  - Seid Hussen Yimam
AU  - Yohans Teshome Negashi
Y1  - 2024/05/24
PY  - 2024
N1  - https://doi.org/10.11648/j.ijber.20241303.11
DO  - 10.11648/j.ijber.20241303.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 46
EP  - 63
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20241303.11
AB  - The Ethiopian real estate industry has grown in the previous two decades, especially in the capital city of the country and regional capitals, including Bahir Dar. Real estate prices have doubled and even tripled in a few years because of different factors. Thus, the purpose of this study is to analyse the factors affecting residential real estate prices in Ethiopia, particularly in Bahir Dar City. For this purpose, the study used both purposive and stratified random sampling techniques. Descriptive and inferential statistics were used to analyze the data, and the ordinary least squares method was used to identify the factors that influence residential real estate prices. The hedonic regression model result reveals that R2 statistics (0.880) indicate that 88% of the variation in residential real estate prices can be explained by variation in the independent variables. Hedonic regression model results revealed that plot size, floor area, number of rooms, age of the house, external wall finishing material, ceiling finishing material, the direction of the house, distance of the property from the main road, and involvement of brokers in the transaction process, were major micro-factors that had a significant effect on residential real estate prices at the 5% level of significance. Furthermore, the interview results show that the challenges faced by real estate developers mostly include loans and aid issues, high-interest rates, mortgage restrictions, the financial capacity of real estate companies, delays in plan approvals, and rising costs of construction materials are among the major challenges affecting investment in real estate. The study suggests that the municipality of Bahir Dar City should provide an adequate supply of land to real estate developers, improve infrastructure development, and federal and regional governments should provide the credit lending mechanism by lowering interest rate especially for low-income class.

VL  - 13
IS  - 3
ER  -

Copy | Download

Author Information

Tamirat Mekonnen Mekuria

Department of Real Property Valuation, Institute of Land Administration, Oda Bultum University, Chiro, Ethiopia

Contact Email

http://orcid.org/0009-0004-6360-6832
Seid Hussen Yimam

Department of Real Property Valuation, Institute of Land Administration, Bahir Dar University, Bahir Dar, Ethiopia

Contact Email

http://orcid.org/0000-0002-7760-5759
Yohans Teshome Negashi

Department of Real Property Valuation, College of Business and Economics, Dire Dawa University, Dire Dawa, Ethiopia

Contact Email

http://orcid.org/0000-0002-6771-4054

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Mekuria, T. M., Yimam, S. H., Negashi, Y. T. (2024). Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. International Journal of Business and Economics Research, 13(3), 46-63. https://doi.org/10.11648/j.ijber.20241303.11

Copy | Download

ACS Style

Mekuria, T. M.; Yimam, S. H.; Negashi, Y. T. Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. Int. J. Bus. Econ. Res. 2024, 13(3), 46-63. doi: 10.11648/j.ijber.20241303.11

Copy | Download

AMA Style

Mekuria TM, Yimam SH, Negashi YT. Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City. Int J Bus Econ Res. 2024;13(3):46-63. doi: 10.11648/j.ijber.20241303.11

Copy | Download

@article{10.11648/j.ijber.20241303.11,
  author = {Tamirat Mekonnen Mekuria and Seid Hussen Yimam and Yohans Teshome Negashi},
  title = {Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City
},
  journal = {International Journal of Business and Economics Research},
  volume = {13},
  number = {3},
  pages = {46-63},
  doi = {10.11648/j.ijber.20241303.11},
  url = {https://doi.org/10.11648/j.ijber.20241303.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20241303.11},
  abstract = {The Ethiopian real estate industry has grown in the previous two decades, especially in the capital city of the country and regional capitals, including Bahir Dar. Real estate prices have doubled and even tripled in a few years because of different factors. Thus, the purpose of this study is to analyse the factors affecting residential real estate prices in Ethiopia, particularly in Bahir Dar City. For this purpose, the study used both purposive and stratified random sampling techniques. Descriptive and inferential statistics were used to analyze the data, and the ordinary least squares method was used to identify the factors that influence residential real estate prices. The hedonic regression model result reveals that R2 statistics (0.880) indicate that 88% of the variation in residential real estate prices can be explained by variation in the independent variables. Hedonic regression model results revealed that plot size, floor area, number of rooms, age of the house, external wall finishing material, ceiling finishing material, the direction of the house, distance of the property from the main road, and involvement of brokers in the transaction process, were major micro-factors that had a significant effect on residential real estate prices at the 5% level of significance. Furthermore, the interview results show that the challenges faced by real estate developers mostly include loans and aid issues, high-interest rates, mortgage restrictions, the financial capacity of real estate companies, delays in plan approvals, and rising costs of construction materials are among the major challenges affecting investment in real estate. The study suggests that the municipality of Bahir Dar City should provide an adequate supply of land to real estate developers, improve infrastructure development, and federal and regional governments should provide the credit lending mechanism by lowering interest rate especially for low-income class.
},
 year = {2024}
}

Copy | Download

TY  - JOUR
T1  - Determinants of Residential Real Estate Property Prices in Ethiopia: The Case of Bahir Dar City

AU  - Tamirat Mekonnen Mekuria
AU  - Seid Hussen Yimam
AU  - Yohans Teshome Negashi
Y1  - 2024/05/24
PY  - 2024
N1  - https://doi.org/10.11648/j.ijber.20241303.11
DO  - 10.11648/j.ijber.20241303.11
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 46
EP  - 63
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20241303.11
AB  - The Ethiopian real estate industry has grown in the previous two decades, especially in the capital city of the country and regional capitals, including Bahir Dar. Real estate prices have doubled and even tripled in a few years because of different factors. Thus, the purpose of this study is to analyse the factors affecting residential real estate prices in Ethiopia, particularly in Bahir Dar City. For this purpose, the study used both purposive and stratified random sampling techniques. Descriptive and inferential statistics were used to analyze the data, and the ordinary least squares method was used to identify the factors that influence residential real estate prices. The hedonic regression model result reveals that R2 statistics (0.880) indicate that 88% of the variation in residential real estate prices can be explained by variation in the independent variables. Hedonic regression model results revealed that plot size, floor area, number of rooms, age of the house, external wall finishing material, ceiling finishing material, the direction of the house, distance of the property from the main road, and involvement of brokers in the transaction process, were major micro-factors that had a significant effect on residential real estate prices at the 5% level of significance. Furthermore, the interview results show that the challenges faced by real estate developers mostly include loans and aid issues, high-interest rates, mortgage restrictions, the financial capacity of real estate companies, delays in plan approvals, and rising costs of construction materials are among the major challenges affecting investment in real estate. The study suggests that the municipality of Bahir Dar City should provide an adequate supply of land to real estate developers, improve infrastructure development, and federal and regional governments should provide the credit lending mechanism by lowering interest rate especially for low-income class.

VL  - 13
IS  - 3
ER  -

Copy | Download