PERCEPTION ON FACTORS AFFECTING REAL ESTATE PRICE IN ADDIS ABABA CITY ADMINISTRATION

Abstract

The Ethiopian real estate has been booming for much of this decade. In many areas, especially within the capital city, Addis Ababa, prices doubled and even tripled in a span of a few years. The main objective of this study is to investigate the direct and indirect factors that cause the price escalation of real estates in Addis Ababa. The study used survey data obtained through structured questionnaires. Sixty-two (62) questionnaires were distributed to selected real estate managerial personnel. Descriptive statistics was applied in order to analyze the data. Results show that among the managerial personnel of real estates in Addis Ababa it is perceived that real estate price has increased and that the affordability of these houses is mostly limited to the higher class. On one hand, location, physical characteristics of property and the accessibility of properties were identified as the major direct factors influencing real estate price. On the other hand, taxation, economic performance of the country and the non-availability of adequate construction technology were stated as the major indirect factors influencing real estate price. Based on the findings, the author recommends that it’s important to monitor the real estate price increase, especially since the current real estate price seems to only target the higher class. Improving infrastructure developments that will improve real estate properties accessibility to transport and other important facilities, revision of the country taxation laws and regulation of the real estate sector and measures that could diminish inflation rate and bank loans interest rate might increase the real estate price affordability, especially to the middle and lower class. Finally, reducing construction costs by improving the number and the level of qualified personnel, by facilitating access to the latest construction technologies and through adopting alternation construction techniques which can reduce construction costs and limit the construction time periods will highly contribute to reducing the final real estate price.