Abstract
While the hedonic analysis has been used extensively to analyze the housing markets in developed countries, it has relatively few applications to African housing markets. The need to study housing markets in Africa cannot be overemphasized. This paper presents the results of a hedonic price analysis of the Lagos, Nigeria, housing market. A Box-Cox transformation technique was employed for the analysis. Implicit prices for housing attributes were estimated to determine their impacts on rental rates in Lagos. The results indicate that both structural and environmental characteristics of a house affect its rent in Lagos. Further, structural characteristics appear to be more important than environmental characteristics in the market studied. These results are generally similar to the results obtained for developed countries, except that environmental attributes seem to be more important in developed countries than this study shows. Some policy implications of the hedonic analysis are briefly discussed.
Highlights
The hedonic price method has often been employed in studying the market for housing in developed countries, this has not been true in less developed countries
The importance of studies dealing with housing markets in Africa is even greater when one considers that these markets revolve around the role of the various governments in the housing markets, resulting in rent controls, direct provision of housing and infrastructures, and poor planning, the nature of housing markets in Africa suggests difficulties with applyi~g results based on the developed countries to Africa
Hedonic price analysis of the housing market assumes a relationship between the price of a housing unit and the attributes of the unit
Summary
The hedonic price method has often been employed in studying the market for housing in developed countries, this has not been true in less developed countries. Okpala (1987) suggests that different models may be needed to analyze housing markets in less developed countries While factors such as school structural quality and environmental factors such as heating problems may be important in most western European countries, they may not be important in most. While the houses are similar in some cases, there exist some basic differences in various areas of the country These differences can be attributed to local customs and traditions, the need for privacy, the skills and building materials available, and the stage of family growth. Non-traditional houses are usually concentrated in urban areas and major towns. They are similar in most cases to houses found in many developed countries.
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