The value of formal titles to land in residential property transactions: Evidence from Kinondoni municipality Tanzania
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 8 December 2017
Issue publication date: 23 January 2018
Abstract
Purpose
The purpose of this paper is to analyse the impact of title risks on property prices to establish the associated title risk-price premiums across property types and the moderating effect of occupation strategies for informal transactions.
Design/methodology/approach
Based on household survey data on transactions for 1,514 residential properties in Kinondoni Municipality, Tanzania, binomial logistic regression models were implemented to predict pre-purchase transaction risks. The results of which were used as inputs in mixed effect models to examine the effect of the predicted title risks on (2,010 constant) purchase price for three-bedrooms finished and unfinished housing units and 400 m2 plots.
Findings
Although legal titles have positive overall title risk-price premiums, such premiums hardly accrue from transactions involving finished houses and marginally accrue from vacant plots transactions. On average, unfinished housing purchasers are title risk-averse, “vacant plots” purchasers are title risk-neutral, while “finished housing” purchasers are title risk-lovers.
Research limitations/implications
The sample composition does not include developer-built housing units, the inclusion of which may sway results away from the observations of this study.
Practical implications
Titling alone can hardly be used as a property market stimuli (eliminate transaction risks) unless the market is dominated by unfinished houses.
Originality/value
Existing studies consider neither traded housing products nor pre-purchase transaction risks or consider only one of the two, thus leaving a gap in the literature for which this study sought to bridge. Researchers must incorporate both to arrive at a well-informed conclusion on the potential risks as well as prices achievable in each transaction.
Keywords
Acknowledgements
Apart from comments from the anonymous reviewers, the first draft of this paper was also presented to the 2017 ERES conference whose participants provided invaluable contribution towards the final version of this paper. This first draft is also available online at https://eres.architexturez.net/system/files/P_20161226113303_347.pdf. The author extends his sincere gratitude to all ERES members for their contributions, though he remains liable for any error or omission. This research has benefited from a generous financial support from the Foundation for African Real Estate Research which is based in Regensburg, Germany. The author has also benefited from comments from Prof. Karl-Werner Schulte (International Real Estate Business School – IREBS, Regensburg University), Prof. Wilbard Kombe (Institute of Housing and Human Settlement Studies – IHSS, Ardhi University) and Dr Anord Kihaule (School of Spatial Planning and Social Sciences (SSPSS), Ardhi University). The author extends his sincere gratitude to all of them for their thoughtful contributions to this paper.
Citation
Alananga Sanga, S. (2020), "The value of formal titles to land in residential property transactions: Evidence from Kinondoni municipality Tanzania", International Journal of Housing Markets and Analysis, Vol. 11 No. 1, pp. 117-148. https://doi.org/10.1108/IJHMA-04-2017-0033
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited