Household Demand for Housing in Kenya

Muthoka, Sila (2015): Household Demand for Housing in Kenya.

Abstract

Previous studies have established that demand pattern for housing identifies with that of a necessary good. The nature of housing goods consumed is highly heterogeneous in dimensions like ownership, size, location and tenure type. In this study I model the probability of household tenure types in Kenya using Household Budget Survey data. Using a Multinomial Logit Model (MNLM) formulation three tenure, household size and age of the household head emerge as significant predictors of household housing choices. Based on the results, the government and firms can rely on household size and age of the household head to approximate demand for housing services in the various tenure types. Furthermore, the ability to interpolate these variables based on occasional population surveys makes it easier to design mechanisms of matching demand and supply for housing services.

• Item Type: MPRA Paper
• Language: English
• Keywords: housing, demand for housing, tenure, multinomial logit, hedonic regression
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand

References

Arvanitis, Y. (2013). African Housing Dynamics: Lessons from the Kenyan Market. Africa Economic Brief, Vol. 4, No. 3:

Africa Development Bank. URL: http://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications Economic%20Brief%20-%20African%20Housing%20Dynamics%20Lessons%20from%20the%20Kenyan%20Market.pdf

Attanasio, Bottazzi, Low, Nesheim&Wakefield (2011). Modeling the Demand for Housing Over the Life Cycle. Review of Economic Dynamics, Vol. 15, No. 1. pp. 1-18. URL:http://www.sciencedirect.com/science/article/pii/S109420251100038X

Albouy, D. & Ehrlich, G. (2014). Housing Demand and Expenditures: How Rising Rent Levels Affect Behaviour and Costs-of-Living Over Space and Time. NBER. URL: http://cba.unl.edu/academic-programs/departments/economics/about/seminar-series/documents/housingexpenditures.pdf

Borsch-Supan, Heiss&Seko (2002).Housing Demand inGermany and Japan.Journal of Housing Economics, Vol. 10, No. 3. pp. 229-252.URL: http://www.sciencedirect.com/science/article/pii/S1051137701902955

Bracke, P. (2013). House Prices and Rents: Micro Evidence from a Matched Dataset in Central London. SERC Discussion Paper 127, Department of Economics, London School of Economics and Political Science.

Echholtz, P. &Lindenthal, T. (2009).Demographics, Human Capital, and the Demand for Housing. Maastricht University, Netherlands.URL:http://www.researchgate.net/profile/Thies_Lindenthal/publication/228280415_Demographics_Human_Capital_and_Housing_Demand/links/00b4951acc22cf419f000000.pdf

Ermisch, J. F., Findlay, J. & Gibb, K. (1994). The Elasticity of Housing Demand in Britain: Issues of Sample Selection. Journal of Housing Economics, Vol. 5, pp. 64-86.

Galbato, N. &Namada-Sarasola, M. (2011). Are Uruguayan Housing Polcies Reaching the Poor? IDB Technical Note tn-278. Washington, DC, United States: Inter-American Development Bank. URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1946139

Henderson, J. V. &Ioannides, Y. M. (1983).A Model of Housing Tenure Choice.American Economic Review , 98-113.

Huchzermeyer, M. (2008).Slum Upgrading in Nairobi Within the Housing and Basic Services Market.Journal of Asian and African Studies, Vol. 43, No. 1. pp. 19-39.

Jimenez, E. &Follain, J. (1983). Demand for Housing Characteristics in Developing Countries. World Bank Discussion Paper WUDD 43. Washington, DC, United States: World Bank.

Rosen, S. (1974). Hedonic Prices and Implicit Markets: Products Differentiation in Pure Competition. Journal of Political Economy, Vol. 82, No. 1.

Wulff, J. (2014). Interpreting Results From the Multinomial Logit Model: Demonstrated by Foreign Market Entry. Organisational Research Methods, Vol. 17. URL:http://orm.sagepub.com/content/early/2014/12/18/1094428114560024.abstract

Zabel, J. E. (2003). The Demand for Housing Services.Journal of Housing Services, Vol. 13, pp. 16-35.