Housing Demand and Its Determinant in a Small Town in India

Abstract

Price of a housing unit can be influenced not only by cost of construction but also by the buyers' evaluations of various attributes associated with the house. It varies across space and time depending on the characteristics of houses and preferences of the potential buyers and their capabilities. This paper examines the impact of various structural, locational, and neighborhood attributes on housing demand of the residents in the town of Dimapur in Nagaland, India. A hedonic pricing technique has been employed for the purpose of estimating housing demand with individual quantitative and categorical variables, along with locational indexes as regressors. The ward-wise variation in house price has been examined by using spatial dummies. The combined impacts of all the three attribute groups on the housing prices (or rent) reveals that with respect to tenants, six structural attributes and four locational attributes significantly affect the monthly rent. In case of owner-occupied respondents, however, only three structural attributes have significant impacts on housing price. Spatial variation in monthly rent is also significant and households residing in wards closer to the main market pay significantly higher rent than do those living far away from the center of town. The findings suggest a need for an even distribution of government and other institutions across wards and also at the outskirts, with proper development of infrastructure and other facilities. It would help in appropriate spatial distribution of housing demand and maintenance of social housing environment.