Do Access to Urban Infrastructure Influence Rental Housing Prices in Kenya?

Abstract

Increased urbanization caused by increased birthrates and accelerated rural-urban migration has caused the mushrooming of low-income residential neighborhoods in major towns in Kenya. The growth of these low-income areas emanates from an increased demand for housing which outstrips the supply. Consequently, as housing demand increases, there is also increased demand for infrastructural development (water, electricity, drainage and waste management). Access to such basic infrastructure is believed to improve people’s standards of living. This study therefore, sought to establish the effects of provision such infrastructure to rental prices using a hedonic pricing model. The results show that provision of streetlights, drainage system, electricity connection, provision of piped water and access to transport services influence rental prices. Additionally, secure neighborhoods, proximity to a park, occurrence of flooding, nearness to a garbage dumpsite, proximity to a factory, number of rooms, external wall material, floor material, and roof material all influence rental prices. The study therefore recommends that that government should protect the low-income people by subsidizing specific building materials and legislating to protect rent hikes beyond specified magnitudes. Such moves will promote affordable housing for the low-income earners