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Housing affordability and housing demand assessment for urban poor in India using the hedonic model

Author

Listed:
  • Prabhat Kumar Rao
  • Arindam Biswas

Abstract

Purpose - This study aims to assess housing affordability and estimate demand using a hedonic regression model in the context of Lucknow city, India. This study assesses housing affordability by considering various housing and household-related variables. This study focuses on the impoverished urban population, as they experience the most severe housing scarcity. This study’s primary objective is to understand the demand dynamics within the market comprehensively. An understanding of housing demand can be achieved through an examination of its characteristics and components. Individuals consider the implicit values associated with various components when deciding to purchase or rent a home. The components and characteristics have been obtained from variables relating to housing and households. Design/methodology/approach - A socioeconomic survey was conducted for 450 households from slums in Lucknow city. Two-stage regression models were developed for this research paper. A hedonic price index was prepared for the first model to understand the relationship between housing expenditure and various housing characteristics. The housing characteristics considered for the hedonic model are dwelling unit size, typology, condition, amenities and infrastructure. In the second stage, a regression model is created between household characteristics. The household characteristics considered for the demand estimation model are household size, age, education, social category, income, nonhousing expenditure, migration and overcrowding. Findings - Based on the findings of regression model results, it is evident that the hedonic model is an effective tool for the estimation of housing affordability and housing demand for urban poor. Various housing and household-related variables affect housing expenditure positively or negatively. The two-stage hedonic regression model can define willingness to pay for a particular set of housing with various attributes of a particular household. The results show the significance of dwelling unit size, quality and amenities (R2> 0.9,p

Suggested Citation

  • Prabhat Kumar Rao & Arindam Biswas, 2023. "Housing affordability and housing demand assessment for urban poor in India using the hedonic model," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 18(2), pages 546-566, December.
    • Handle: RePEc:eme:ijhmap:ijhma-09-2023-0124
    DOI: 10.1108/IJHMA-09-2023-0124
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