Evaluation of House Rent Prices and Their Affordability in Port Moresby, Papua New Guinea

Eugene Ezebilo

doi:10.3390/buildings7040114

Abstract

Access to affordable housing has been a long-standing issue for households in most cities. This paper reports on a study of house rent prices in Port Moresby, factors influencing them, and affordability of the prices. Data was obtained from houses that were advertised for rent in Port Moresby for a period of 13 months and were analysed using the ordinary least squares (OLS) regression model. The results show that monthly house rent prices range from 2357 to 34,286 Papua New Guinea Kina (PGK), or 714 to 10,389 U.S. dollars (USD), and the median price was 7286 PGK (2208 USD). Houses located in the central business district had the highest median house rent price, whereas low-income areas had the lowest rent price. By dividing the median house rent price by gross household income, the housing affordability index was 3.4. House rent price was influenced by factors such as number of bedrooms and location. To make house rent prices more affordable for Port Moresby residents, it is necessary to supply more houses for rent relative to demand, especially in low-income areas. Relevant governmental agencies should put more effort toward unlocking more customarily-owned land for housing development and toward facilitating the private sector to construct more low-cost houses for rent, which are affordable for low to middle income households. This has the potential of improving Port Moresby residents’ access to affordable houses for rent. The findings could assist urban development managers and planners in allocating resources for housing by considering housing demand, supply, and house rent prices.

Highlights

Housing is one of the basic necessities for humans and it accounts for the largest share of the consumer price index [1]
The results show that all the houses that were advertised for rent had an average of three rooms, and 16% of the houses were found in Town suburb (Table 2), which is the central business district (CBD)
The findings are supported by findings from previously published papers such as Leung et al [44], who found in a general equilibrium model that house price and house rent price and affordability are determined by location and accessibility to trunk infrastructure

Summary

Introduction

Housing is one of the basic necessities for humans and it accounts for the largest share of the consumer price index [1]. Providing houses at affordable rent prices has been a long-standing issue for governments of most countries [2,3,4,5]. A house is a multidimensional good, which consists of a bundle of attributes that differ in quantity and quality and influence house rent price [10]. This includes physical attributes such as number of rooms, lot size, and housing type; community attributes such as population and characteristics of neighbourhood; and accessibility to the place of work. People’s preferences for these attributes differ, and they often influence the amount of money that consumers would be willing to pay for house rent [11]. If a house owner sets too high a house rent price, he or she might discourage potential tenants and risk having

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