Impact of accessibility on house rent in Dhaka city: a hedonic price approach

Abstract

The key aim of this research is to contribute in the understanding of the relationship between house rent and accessibility in the context of Dhaka city. Housing is a serious problem in densely populated urban areas particularly in cities like Dhaka. The imbalance of housing demand and supply is aggravated by accessibility facilitated through transportation system. It is important to understand the relative contribution of accessibility in the change of housing demand which is reflected by house rent. In the context of analyzing house rent, besides accessibility other associated variables like condition of utility services, environment and neighborhood are also incorporated in the analysis. The study is based on hedonic price model to correlate house rent with its influencing factors. Multiple Least Square Regression is used to implement hedonic price modeling concept in the analysis. The study commences with analysis of house rent pattern in Dhaka city. For this purpose a GIS based database is developed. It is observed that except north and northwestern direction, the house rent in general reduces with the distance from the eBD at Motijheel area. In the north and north western directions which include Gulshan, Banani and Dhanmondi areas, house rent is found to be high at locations farther away from the central area. It is also observed that the house rent in older Dhaka area is relatively low in general. Still there are some locations in older part of the city having a very high rent which is caused by commercial activities. In the analysis it is found that house rent is affected by the quality of utility services, which include electricity, gas and water supply, level of environmental condition, features of neighborhood, width of access road and accessibility. Based on data of household survey and network travel time among the wards obtained from Dhaka Urban Transport Model, the analytical models are calibrated. Among the three measures of accessibility investigated in the study the measure which include the population of both origin and destination as weighing factor, together with inverse ofthe travel time, is found to be the most acceptable. For analyzing policy implication house rent elasticity with respect to different variables were analyzed. It is found that house rent per unit area reduces by 0.46 percent for 1 percent increase in average floor area from 1252.36 square feet of the house. On the contrary, house rent increases by 0.19 and 0.03 percent respectively with I percent increase of average aggregate environmental index and average aggregate neighborhood index from 9.49 and 9.41. The width of the access road is found to be an important parameter determining house rent and a I percent increase in average access road width from 12.50 feet causes 0.29 percent increase in the rent. An increase of accessibility by I percent will result in augmenting house rent by about 0.1 percent as obtained from averaging the results of the three accessibility models. The results of the study can be beneficial for the city planners and municipality officials in order to analyze transportation projects and determine housing taxes.