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Factors that affect the choice of house buyers in AddisAbaba

Final approach to Addis Ababa International

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The rate of urbanization is higher in developing countries, including those in Africa, despite the current low level of the urban population, Africa is urbanizing at a faster rate than other areas and will reach 56 percent by the year 2050. In Ethiopia, the current rate of urbanization is high. According to the World Bank (2015), urbanization in Ethiopia is increasing by 5.4 percent a year, putting it among the fastest ten urbanizing countries in the world. Addis Ababa is easily the largest urban area in Ethiopia and serves as the headquarters for the African Union (AU). Here are some factors that affect the choice of house buyers in AddisAbaba


The relative access and quality of education and health infrastructure and facilities also determine residents’ choice of location. Safety and crime condition in a given area is also an important factor for residents’ preference of a location. In addition to the physical location of a particular house, residents also care about the facilities available around the location of a house. These include access and quality of economic and social infrastructures such as schools, water, and other related facilities.


The income of the household affects resident’s willingness to pay and the rent value they attach to the house. For instance, households with higher income were willing to pay higher house prices and rental value as compared to low-income groups. This indicates that the value of houses depends not only on the house characteristics and environmental factors but also on people’s ability to pay.

Quality of Construction

The type of materials in which the house is constructed can determine the price and rental value of a house. The material by which the house is built can affect the strength and durability of a house. To examine this effect, we incorporated the categorical variable of the main materials for house construction using concrete, bricks, wood with mud and cement, metal sheet, and stones.

Size and Style of House

The number of total rooms, bedrooms, and the size of house compound areas were important house characteristics that might influence buyers’ choice of a house. An increase in the area of a house increased the price residents were willing to pay by 1.2 percent and significant at 1 percent, keeping other things constant

Green Amenities and other factors

Green amenities and other factors can affect the house buyers preferences in AddisAbaba and hence determine the value residents attached to a house. In addition to parks, the availability of attractive landscape and nature views near to the house has a positive determination on the price of the house. The positive and statistically significant effect of a view of the landscape and natural features on the price of the house can be expected in Addis Ababa. Residents prefer locations closer to urban forests and mountains and are also willing to pay 50 percent higher rent for houses that have access to parks.

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