A hedonic approach to the real estate market in Tanzania: a case of Kinondoni municipal, Dar es Salaam

This paper seeks to determine the factors affecting house rents in Tanzania with a focus on Kinondoni Municipality. The theoretical approach used is the Hedonic estimation technique whereby the value of the house is regressed against both structural, location, and neighborhood attributes that affect the value of the house. The data was collected using questionnaires whereby households were randomly chosen from various wards in the municipality and interviewed (See Appendix A). A Map available using satellite was used in the calculation of distances from the city centre for various locations. In this particular study, monthly house rent has been used as a proxy for the value of the house itself but in the regression ran, the natural log of the house rent was taken as the dependent variable. It was therefore a semi log model. The results of study revealed that more than 20% of the households in the municipality do not have access to most social services including water, garbage collection, and sewage system. On the other hand more than 95% of the households do have electricity in their homes. Electricity is therefore regarded as most important apart from having the most coverage, it also causes an increment of more than 300% of the house rent if available in comparison to when it is not. Other social services such as waste collection, water and sewerage cause an increment of 43.9%%, 88.2% and 82.5% respectively. The present study has importance to policy makers to design policies that will improve both housing and sanitation. It also helps institutions in the real estate business to have a welfare improving approach as they make decisions on where and how to invest in housing.