An Investigation of determinants of house rent in urban Tanzania: a case of Kinondoni Municipality, Dar es Salaam

Housing is a composite good that can be broken down to a number of attributes. That is physical, environmental and locational attributes. Each of these attributes is believed to possess an implicit effect on the house value. This study assesses the determinants of house rent in urban Tanzania using Kinondoni district of Dar es Salaam as a case study. A total of 203 households were surveyed though only 200 were used for regression purpose. The Hedonic Pricing theory is the main theory governing the study and the Tobit model which uses the Maximum Likelihood Estimation (MLE) is used for estimation. Socio-economic characteristics of households and structural, neighborhood and locational attributes of a house were used as independent variables and the monthly rent was used as a dependent variable. The study found that number of bedrooms, filed floors, piped water system, electricity, fence, distance to shopping center, location, income, age, marital status and primary education are significant in explaining rent disparities in Kinondoni district. The study also reveals the importance of the environment in influencing individuals’ preferences of a place to stay both on permanent and temporary basis. In view of these findings, this study has implications to various real estate stakeholders to learn on households’ preferences of housing attributes inclusive of the environment so as to come up with housing products that match with these preferences. It also implies on the adoption of a financial scheme that will cater for housing needs of low income households.