Effects of Locational Characteristics on the Value of Residential Properties


Bachelor Thesis, 2018
75 Pages

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Table of Contents

LIST OF TABLES, CHARTS AND FIGURES

ABSTRACT

1.1 Introduction
1.2 Problem Statement
1.3 Research Objectives
1.4 Research Questions
1.5 Significance of the Study
1.6 Research Limitation

2.0 Introduction
2.1 Determinants of Residential Property Value
2.2 Demand for Customary Lands for Residential Purposes.
2.3 The Concept of Price, Worth and Value

CHAPTER THREE
Methodology and Study Area Profile
3.1 Introduction
3.2 The Research Approach
3.5 Case Study Areas
3.6 Data Collection Techniques
3.6.1 Questionnaire administration
3.6.2 Quality Control for Data Reliability and Validity
3.6.3 Data Management
3.7 Stages of Research
3.7.1 Reconnaissance Stage:
3.7.2 Main Survey Stage:
3.7.3 Analysis Stage:

4.1 Demographic Characteristics of Respondents
4.1.1 Gender and Age Distribution of tenant’s respondents
4.1.2 Gender and Age Distribution of landlord respondents
4.1.3 Educational Background of Landlords and Tenants Respondents Landlords
4.1.4 Occupational Background of Respondents
4.2 Locational attributes of housing
4.3 Factors that Influence the Value of Residential Properties
4.4 Summary Statistics of Regression of Socio-Economic Characteristics and Choice Building Type.

5.0 Introduction
5.1 Summary of findings
5.2 Conclusion
5.3. Recommendation

LIST OF TABLES, CHARTS AND FIGURES

TABLES

Table 4.1: Age Distribution of tenant’s respondents

Table 4.2: Age Distribution of landlord’s respondents

Table 4.3: Occupational Backgrounds of Tenant Respondents

Table 4.4: Occupational Backgrounds of Landlord Respondents

Table 4.5: Ranking of Available Amenities Influencing Locational Choice

Table 4.6: Determinants of the Rental Value of the Residential Properties

Table 4.7: Summary of multiple regression of explanatory variables and residential property values

Table 4.8: Statistics of Regression of residential Property Values and the explanatory variables

Table 4.9 Statistics of Regression of building type and socio-economic characteristics

Table 5.0: Model Summary of Regression of residential properties and socio-economic characteristics

FIGURE

Fig. 4.1: Gender Distribution of Tenant respondents

Fig 4.2: Gender Distribution of landlord respondents

Fig 4.3: Educational Background of Landlords

Fig 4.4: educational background of tenants

Fig.4.5 Correlation the Value of Residential Properties and explanatory variables

Fig 4.6 Correlation between socio-economic characteristics and residential property type

ABSTRACT

The aim of this study is to analyze and determine the relative roles of locational characteristics in the determination of housing values/prices. In order to achieve this, attempts were made to evaluate the role of locational factors in the determination of house prices; study how house prices / values in Wa Municipality of the Upper West Region of Ghana. Data collection techniques was the mix approach and tools such as group discussions and questionnaire administration were used and data was analyzed by the use of Statistical Package for Social Sciences (SPSS) and qualitatively as well. . The significant of each variable involving socio-economic characteristics, landlord experience, building characteristics and locational characteristics was evaluated through a multiple regression model. The findings categorized into levels on the basis of the coefficient values. The results indicate that locational characteristics are the most significant variable that determines the value of residential properties in the study area.

1.1 Introduction

Residential property markets are very important as it serves as a source of amassing wealth through rental income, revenue to the government through taxation and property rating and provision of shelter for mankind. Shelter is a basic human need, and for many people a house is the largest asset they ever own. Dynamics in residential property markets can also have a significant impact on the cyclical performance of national economies. However, residential property markets are also complex. Outcomes are determined by conditions in and interactions between a numbers of individual markets: the market to rent a house, the market to own a house, and the market to build a house (which is, in turn, affected by the market for land) (Watson, 2013). Residential housing is a durable good producing service streams that satisfy the basic human need for shelter while simultaneously serving as a store of purchasing power (Barker, 2005).

The pattern of residential development within the context of metropolitan growth and development has been the subject of an extensive literature. Among the streams of literature have been mono-centric and polycentric models, rent gradients and population density, and spatial mismatch and jobs/housing balance (Smersh, Smith, and Schwartz, 2003).

Real property value can be influenced by a number of factors. They include safety, ethnic background, building codes, community facilities, utilities and services, waste dumpsites components or elements that form part of a building structure and so on. The impact of positioning in the housing market is really important. Since housing unit is fixed in position, they disagree in terms of their surroundings, kind of community, in which they are placed, and their nearness to employment and shopping plaza. Location area also means that the dwelling surroundings are possibly of large importance in affecting its value (Alluko, 2008). These research papers among others seek to examine how location determines house prices or values and the tastes of the masses.

Moreover, multiple sites may be suitable when evaluated across the range of criteria, yet one is developed. Further, development may move in a single direction or sector of a city although suitable sites are available in other areas. This suggests that certain factors may be more important than others in determining the location of residential properties.

Nonetheless, residential properties are both consumption and investment good (Sratton, 2008). As consumption good it is acquired for owner occupation. Also, the housing good (property) may be to maximize optimum return from outright sale or letting. If this is the case, the price of the residential property becomes very important to the landlord and the occupants.

Hence investment in this type of property is regarded as a considerable source of wealth for many Individuals. The physical characteristics of the property such as number of bedrooms, age, site, various amenities and services have been noted to help determine the rental price for landlords as they set rental prices for residential properties.

In addition, external factors such as population, income, traffic congestion, proximity to work, access to public transportation, proximity to higher institution and environmental characteristics may have significant impacts on rent (Oni, 2007). Therefore, any serious investigation into the nature and behavior of residential property price should recognize that property as a commodity, is not a single good, but a complex bundle of services or potential services which operate in many dimensions (Oyebanji, 2003).

The purpose of this research paper is to analyze and determine the relative roles of location characteristics of residential properties in the determination of housing values/prices. This study will first examine the issue of the influence of location on housing prices. The questions posed are why do housing values vary by location and how can housing attributes be priced to reflect locational variation? Secondly, the research will examine the spatial variations in the housing values and seek explanation through neighborhood attributes. This is to explore the nature of demand for neighborhood preferences of households.

Location refers to the specific placement of a house, which affects housing choices. A home is part of a neighborhood and should be viewed in the community setting. Each occupant has needs, which must be met in the larger community. Facilities for education, transport, worship, health care, shopping and recreation are factors to be considered when making housing choices. Location choices also range from urban to suburban to rural. A home that takes advantage of its surroundings reflects the character of the area. For homes should always fit their surroundings. Location is thus an important consideration in the design and construction of a home. The materials used to build the structure as well as the furnishings used to decorate the interior can be affected by the location.

In other words, households pay much attention to neighborhood characteristics as determinants of housing prices. But, existing empirical studies of housing demand and supply are inconclusive on the influence of the neighborhood variables on household's residential choice (Aluko, 2008). The results are inconclusive because the studies are of the assumption that the effect of structural housing characteristics on property values is fixed, that is, invariant across neighborhoods. Therefore, this study is to examine the different housing prices produced by housing attributes at different locations and their influence on the spatial variations in the demand for neighborhood attributes.

1.2 Problem Statement

A range of different factors can influence housing market outcomes. In the long run, house prices will tend to converge to the cost of new housing construction (including land). However, house prices, like all asset prices, can diverge from their justifiable long-run equilibrium for extended periods of time (Watson, 2013).

Many previous researchers (Aluko, 2008), Goldberg (1970), Garrod and Willis (1994) and Anas (2002) in the field of residential property value focused their attention on many tangible location factors, which form the basis of residential property value. In the recorded history, the first researchers who dwelled so much in this regard are Ricardo (1817) and Von Thunen (1828). In his assertion, Ricardo was of the view that the main determinant of land and landed property value is the fertility or quality of land. He therefore concluded that areas that are more fertile command higher value as compare to areas that are less fertile. Von Thunen further supported this theory by introducing transportation as the prime mover of land and landed property value.

Wingo (1961) and Alonso (1964) as cited by Aliyu 2012 argues that household prefers to stay in areas where they have good location, accessibility and transportation. A family is willing to spend most of their income in order to secure an accommodation that fulfills such qualities.

In the contrary, some famous researchers such as Steines (1977), Tiebout (1956), Wieand, (1973) and Zipf (1949) is of the view that closeness to central business district, demand, supply, population size, rent, zoning regulations, subdivision regulations, building codes, environmental protection laws and planning restrictions are the main indicators of residential property value.

Furthermore, according to Mallo and Anigbogu (2009), Manvel (2008) and Peek and Wilcox (1991) in the field of residential property value, emphasized that residential property value is being determined by the components or elements that form a building. Going by their assertion, buildings with good floor, roof, window, doors, good decorations and finishes command high value compare to the one that lacks this quality. In other words, others ascribed value to a residential property as a result of the structural mechanisms and machineries of the building. (David and Peter, 1974). In the same vein, others ascribed property value by looking at some intangible attributes of location like race or skin color.

Thayer and Morteza (1992) have consistently found that proximity to hazardous waste dumpsites and other locally undesirable land uses has a negative impact on property values. Location has long and frequently been considered a primary determinant of real estate value. An early study in 1926 addresses the role that location plays in determining land use and rents (Ridker and Henning, 1967). A critical look at the aforementioned models and postulations reveal that residential property value is determined by many factors, which could be tangible or intangible. From the aforementioned, it could be observed that all these theories have some discrepancies as only few of them look at some locational characteristics and its effects to residential properties on customary lands, It is therefore against this background that the research examines the effects of location on the value of residential properties.

1.3 Research Objectives

The research aims are to observe or critically look at the effect of positioning as a major component in finding residential property value. The following are the objectives of this project;

1. To examine the factors that influence residential property value in the study area.
2. To examine the socioeconomic characteristics that influence the choice of residential property type.

1.4 Research Questions

1. What are the factors that influence the value of residential properties?
2. What are the socioeconomic characteristics that influence the choice of residential property type?

1.5 Significance of the Study

This study will help valuers or future realtors and land managers to identify or access the housing rental values or prices of residential properties in the area of study. Also, it would help to add some new knowledge to existing written valuers report of the area. It is expected that this research would fill the gap by providing concrete evidence on the housing rental prices or values of the area of study. Based on these values foreign investors, real estate investors and landlords will be able to determine how much to sell or buy a residential property in the study area hence maximizing profit. Moreover, the study will help land valuers or managers to understand the accessibility in relation to property values of which profitability and utility are determined by accessibility. The greater the accessibility of a location, the greater the comparative advantage and the greater or higher the demand for the property at the location, the land value would increase. Urban areas naturally develop at nodal points in the transported network and those locations with good transport access to different areas have relative advantage over location with poor transportation access or facilities. Hence, increasing property values at locations with good transportation access.

Also, the study will help land use planers and policy makers to know how location affects residential properties and serves as a guide in policymaking process. Thus guiding land use planners and policy makers to consider some neighborhood characteristics before making decisions.

In addition, the study will help the government and other researchers to understand the socioeconomic position of the citizenry in the area of study. Socioeconomic status is an economic and sociological combined total measure of a pursuits work experience of an individuals or family’s economic and social position in relation to others based on income, education and occupation. The study will help to differentiate the three levels of socioeconomic status (high, middle, low) describing the three places where a family or an individual may fall. Any or all of the three variables (income, education and occupation) could be assessed when placing a family or an individual in the three levels of socioeconomic status, this at the long run assist the government in decision-making process.

1.6 Research Limitation

There are several obstacles that needs to be overcome in carrying out this study, it includes Communication barriers, although interpersonal communication by which meanings are perceived and understandings are reached among mankind, but there would be barriers in the communication system that prevents the message from the receiver. Also, different languages, vocabulary, accent and dialects represent barriers in communication, which sometimes makes understanding difficult. However the problem of communication would be solved by soliciting for the support of some community members and some stakeholders such as the Assembly Member.

Moreover, time is of essence in every activity that is to be carried out in this world. I will have to take time to allay the fears of property occupiers in the area of study by educating them about the essence of the research, that it would in no way expose them to imposition of levies or charges or any liability. Also, the thesis has a due date to finish and to submit, which is insufficient therefore it accounts as a limitation in one way or the other. In order to finish the research on time I have to work as around the clock as well as ensuring discipline and hard work so that I can finish within the due date given.

In addition, getting access to data from organization and private individual might be difficult because some regulation strict the given out of data easily to a third party thereby making their data confidential. Due to this, access to the data needed can be denied or limited. Even though, some data or information to be collected from organization and private individual were confidential but promising them that the data would be used confidentially and only for academic purpose, therefore the data would not be released to any third party would help in building trust between me and organizations as well as private individual.

Finally, financial constraint is one of the major challenges that will be faced in undertaking the research. Data collection, transportation and printing of questionnaires demand the use of money. As a student, it is one of the major constraints I have to battle with. Funds will be solicited for and contributions made to support the research.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

In this Chapter, available literature was reviewed along subject matter of the research Project, which are location and residential property value; the central theme being customary lands, location and residential property values. To understand these within existing literature, this Chapter undertakes a review of literature on individual components of the central theme and combinations of such individual components, as basis for developing the researcher’s ideas on the general concept of the study. The review of literature, in addition, aims at providing detailed account of earlier studies in order to identify the gap that exists in the literature, which the thesis attempted to fill. Literature from extant disciplines such as land economics, transportation management, realtors and regional planning, amongst others found useful for addressing the central themes were studied. Specifically, emphasis was on previous writings on location, customary lands, land values and residential properties values.

2.1 Determinants of Residential Property Value

Without standardization, each property is considered to be unique and thus is priced differently (Ruvio, 2010). According to, Odame (2010) a real estate asset consists of a bundle of attributes including, but not limited to location, but number of bedrooms, gross and lettable floor areas, number of storey’s, type of tenure or ownership rights, plot size, quality of aesthetics and accessibility, all of which may affect its rent and price. Further, Kim and Nelson (1996) clearly mentioned that assessing the rental value of residential properties is a complex and challenging process to both practitioners and academicians because it involves analyzing the rental property, neighborhood characteristics and market conditions. McKenzie and Betts (2006) explained these attributes include physical features such as space, age, condition and apartments. Some features can be measured by objective scale or techniques. Other amenities however are not so objective.

According to Oyebanji (2003), a number of factors affect property values in Nigeria. These include population change, change in fashion and taste, institutional factors (culture, religious belief, and legislation), economic factors, location, complementary uses, transportation and planning control. He stated further that good spread of road network has tendency to increase accessibility with certain areas becoming less accessible as a result of traffic congestion thereby causing value to shift to areas that are accessible. Other factors identified by Sada (1968) include the effects of political factors on geography of a study area noting that the emergence of Lagos as a livable city was as a result of the political decision that made it a capital city in 1914. He concluded that the supply of different services is bound to make the city differentiated along many socially related lines with concomitant effects of property values. However, Rameezdeen et al (2006) see the location as a key factor from customer’s point of view. Chris and Somefun (2007) and Nakamura and Crone (2004) explained the attributes includes bedroom, toilet, bathroom, kitchen, open space, drainage, water supply, refuse disposal, good road network, recreational parks, hospital and many more.

Furthermore, where a building is located will determine how easy it will be to attract customers or how easy it will be for employees to get to work. Buildings within city limits are more valuable than those outside the city and those closer to the center of town and major roadways are worth more than those on small or obscure side streets. The neighborhood within which such buildings located also determines the value and profitability of the real estate. Potential income of an office space is another factor. An investor will calculate the amount of money that a property is likely to bring each month from renting the property. This is an important part of the commercial property analysis. Check out nearby properties to discover if they have good rates of renting and retaining tenants. Zoning law is another factor, each city has its own set of zoning laws setting forth how certain areas of town are allowed to be used. However, Abidoye (2016) in his study concluded that property location, neighborhood characteristics, property state of repair, size of property, availability of property security and age of property are variables that influence property value in order of importance.

Other researchers like Oluko (2008) in his research on the effects of location and neighborhood attributes on housing values in metropolitan Lagos concluded that there are spatial variations of neighborhood and locational attributes on house rental charges. There are lots of variations for individual houses within the same locations and neighborhoods. However, why some variable show high variability in the different neighborhoods, some are not significant. The significant variations in almost all the variables in the different neighborhoods could be attributable also to the various locational differences which exist in the housing structures. One of the most important variables in identifying the housing values in different neighborhoods is the house rentals. He also emphasized that the quantity of properties with basic amenities and their location confer some measure of value on the neighborhood. The price of a residential property on the free market reflects the willingness of the purchaser to pay not only for the property itself, but also for a specific residential environment in other words, for the quality of “social space” (Reed 2001). That is why some people, while considering their status socially and economically will always prefer specific neighborhoods, no matter the cost. Those with relatively high incomes choose their residential area in an attempt to avoid neighbors with a low socioeconomic status. The popular viewpoint considers social problems, such as crime, drug use, and the neighborhood’s economic decline resulting in neglected buildings, as all directly linked to neighborhoods characterized by a high proportion of unemployed and low levels of education and income (Harris, 1999). Raymond (2000) further discussed that a residential property is a multi-dimensional commodity, characterized by durability, structural inflexibility as well as spatial fixity.

Based on the above justifications on rental values recent empirical work has investigated substantial lists of factors that have been employed to explain market rents for residential income property. These factors range from physical attributes to property management quality characteristics. Kim and Nelson (1995) also build a model that can provide an accurate way of assessing the rental value of residential rental property and analyzing the factors that determine market rents by using an Artificial Intelligence Technique. The model constructed by Kim and Nelson (1995) in their research incorporates all variables and these independent variables are organized into four categories as follows;

Abbildung in dieser Leseprobe nicht enthalten

Building Characteristics are subdivided into building type, size of unit, amenities, and maintenance. Building type includes the number of units in the structure and age of the building. Size of rental unit includes number of rooms, number of baths and number of bed rooms. Size is the total square footage of the building. Sirmans and Benjamin (1991), Redman and Gullet (1998) all found building size to be a significant factor affecting property values.

Landlord characteristics include the investor’s age, years of experience and number of properties owned. Tenant characteristics include the head of household age, race and education level. Also included are household income, number of children and length of residence. Neighborhood characteristics include the tenant’s option of the neighborhood and whether or not crime is perceived to be a problem. Additional variables included are the presence of abandoned buildings and noticeable litter. Sirmans and Benjamin (1989) examine multifamily housing amenities and services and external factors affecting rent. This application is most applicable in this study, because some tenants included in the sample are sharing amenities and services with land owner.

Also, road network constitutes an important element in urban development as roads provide accessibility required by different land uses and the proper functioning of such urban areas depends on efficient transport network, which is a backbone to their very existence (Aderamo 2003). Singh (2005) as cited by Oni (2008) found that the impact of road transport was positive particularly regarding capital increase in residential property values. However, the study put less emphasis on exact values, and some of the observed increase may be due to optimism of the markets rather than actual effects. Similarly, there is also some evidence that residential property prices might decrease immediately around the transport investment or station. Value increase was determined in the study in a narrow way and mainly through changes in property and land values whereas wider range of measures ought to have been used.

Contemporary land market theory established that differential firms access to business activity clusters elicit significant effects on commercial land market as exemplified in firms valuing main and secondary centres accessibility in the urban areas (Sivitanidou, 1996). In a study on land value determinants in medium density residential neighborhoods of metropolitan Lagos, Oduwaye (2004) found that access roads, good drainage, electricity, public water supply and telephone are essential and where facilities are adequately available, land values will be high. He stated that road network is one of the factors that influence property values and established that improvement in transportation facilities especially roads brought about improved accessibility.

However, from the literatures reviewed above, it is evident that the studies focused much on neighborhood characteristics with concentration on market conditions and physical attributes. Also earlier studies focused on land use and urban development with considerable works carried out by scholars such as Oluko (2008), Sirmans and Benjamin (1989), Kim and Nelson (1995) and Raymond (2000) in various disciplines to explain the determinants, structures and effects of residential land use and land values in the urban areas. Little attention is given to location of residential properties and how it affects their value.

2.2 Demand for Customary Lands for Residential Purposes.

Land is a very important asset not only for sustaining livelihoods but also for generating wealth (Savath et al., 2014). Its significance in most sub-Saharan African countries, including Ghana, where agriculture is the mainstay of the people, cannot be overemphasized. Land serves as a factor of production, generates wealth and supports the livelihoods of all nations. It contributes, greatly to the agrarian backbone of most of these economies and constitutes a substantial part of their Gross Domestic Product (GDP) (Commission for Africa, 2005 cited Toulmin, 2008).

Apart from that, land rights do not seem to relate only to economic factors but also to political, social as well as religious aspects of their lives (Agbosu et al., 2007). With the Akan ethnic group, for example, land is woven into the very fabric of society. There is the belief that land is an ancestral heritage and, therefore, needs to be wisely used and conserved for the benefit of present and future generations. It is because of these reasons that land is jealously guarded and preserved among many communities in Ghana. Its management and conservation are considered paramount and are placed under a traditional land tenure arrangement, and guided by existing statutory tenure, however, this is not so different from the case in the Northern region of Ghana. In the Wa traditional area, there is the belief that land is an ancestral heritage which has been handed over to successive families of the ancestral lineage. This has invariably resulted in the fact that, the land is woven into the very fabric of these families and their generations unborn. This position has resulted in the creation of four main land owning families (Kpaguri, Sokpeyiri, Puohuyiri and Suuriyiri) in the Wa Municipality as corroborated by (Kuusaana, 2007).

Land tenure is defined as a set of rules and regulations that govern the holding, use and transfer of interest and rights in land (Payne, 1997 cited by Mends, 2006). Within traditional certain, land under customary law is expressed in terms of rights established within a particular tradition. The land is alleged to be an ancestral heritage with a spiritual affinity attached. Customary land tenure, therefore, is believed to be a communal arrangement of land ownership where inalienable land rights are held by trustees on behalf of the whole community. As Ollennu (1962:4) revealed, “land belongs to a vast family of which many are dead, a few are living and countless host are still unborn”.

The customary land tenure regimes in Ghana are diverse in concepts and practices, and are location specific but exhibiting the following commonalities (Kasanga and Kotey, 2001; Agbosu et al., 2007): The land is usually managed by traditional rulers with the council of elders, land or earth priests, family or lineage heads as trustees. Its principles stem from rights established through conquest, settlement, first clearance of land, and as gifts. The members of the land owning community enjoy rights as usufructs. Each member has a right, indeed an inalienable right, to the portion of the land he is cultivating and no other member has that same right to it (Kasanga and Kotey, 2001; Woodman, 1996). There were oral dealings in land where boundary lines were virtually absent. In fact, the boundaries of lands were identified by natural features like trees and rivers (Kasanga et al., 1996; Agbosu et al., 2007).

The colonial period witnessed a lot of intrusion in the legislative and judicial processes of the country. Prior to the colonial era, land and other natural resources like water and mineral ores were held by communities under local rules and practices now referred to as customary law. Actually, the colonial state established a system of land tenure which preserved some pre-colonial land relations while creating new interests based on the English land law with a significant role for the state in the administration of land and the adjudication of disputes. The land rights vested in various beneficiaries vary from the southern part of the country to the north (Larbi, 2006; Crook et al., 2007). The customary land tenure arrangement has, therefore, evolved into a novel system operating alongside the statutory system. The customary system creates a fiduciary arrangement while the statutory tenure, instituted by the colonial rule, introduced state control into land administration. This eventually resulted in the privatization of land parcels; a situation typical to the urban areas of the country. Rural areas still experience largely the customary land tenure system (Mends, 2006).

The communal land tenure arrangement practiced for many decades is persistently changing particularly in the urban areas of the country. This is a result of the dynamics in population growth, expansion of urban areas and the persistent commercialization of land. Aside this, the inefficiencies in land management in Ghana have created a lot of ambiguities as well as increased pressure on the institution of land tenure and management (Kasanga and Kotey, 2001; Larbi, 2006; Crook et al., 2007). The result is overwhelming challenges and constraints confronting land tenure. Among these are the difficulty in accessing land for agriculture, residential and other purposes; inadequate security of tenure due to legal pluralism and the slow disposal of land cases, multiple sales of land, indeterminate customary land boundaries, inappropriate records keeping, weak land administration system and conflicting court judgments.

The National Land Policy document of Ghana, acknowledges many other constraints confronting land tenure in the country which include: the general indiscipline in the land market; indeterminate boundaries of stool and skin lands; inadequate security of land tenure due to conflict of interests between and within landowning groups and the state; land racketeering, slow disposal of land cases by the courts as well as the weak land administration system. These constraints have culminated in the Land Administration Project (LAP), a reform which aims “to develop a sustainable and well-functioning land administration system that is fair, efficient, cost effective, decentralized and that enhances land tenure security’’ (World Bank, 2003).

As land is persistently being commoditized, the authority of traditional land administrators, who are the custodians of most lands, has come under stress. Ubink and Quan (2008) assert that the authority to allocate land rights as well as the entitlements to the proceeds from such allocations is being questioned. Kasanga and Kotey (2001) observed similarly that the trusteeship philosophy of the customary tenure system has been abused, thus eroding its credibility with the gratuitous alienation of land by chiefs and other traditional leaders. This might be so because rights to land in Ghana are indeed situated within a complicated mix although land rights are interlocking. The land rights vested in various beneficiaries vary from the southern part of the country to the north (Larbi, 2006; Crook et al., 2007). For instance, there are varied opinions as to whether gender disparities exists in access and control over land in parts of the country. Although, customary land tenure is said to be under pressure, it also adapts to new circumstances.

A thesis research by Pomevor (2014) in the Odupong Ofaakor area of the Central Region of Ghana revealed that the indigenes of the area are Awutus, one of the Guan ethnic groups in the country. Little is known of their land tenure system because there seems to be little documentation on it. Preliminary investigation revealed that even though the land belongs to Nai Odupong stool, there are problems of ownership and land acquisition as a result of land use changes and increase demand for land as well as the rapid urbanization of the area. Land in this predominantly rural community, had until recently, been used exclusively for agricultural purposes. Rapid urbanization of part of the area has considerably changed this pattern and the land in the area is now being used for residential and commercial purposes. This change has come not without its dynamics of the land tenure practices in the area and stress on the land market. It is, therefore, evident that, as land value appreciates and demand for land increases, pressure increases on land tenure and management. Ownership tends to be challenged. Rival factions of the royal family begin to lay claims to ownership and conflicts arise. Instances of double sales and legal suits bedevil the tenure system and the land market in the area and development seem to be stalled.

The debate becomes more profound from research to research. Kasanga and Kotey, 2001 observed that, Subsistence agricultural land has acquired real value with rising land prices and high opportunity costs. Demand appears brisk and landholders (chiefs, queen mothers, family heads, and individuals) have responded accordingly, sometimes in direct contravention of the statutory requirements and regulations. Physical development has overtaken the formal planning process, with the emergence of flourishing housing land markets in almost all the study villages. A standard building plot measuring 100 feet by 100 feet, which was worth only 10 Cedis in 1960 at Asaago, could fetch C1.5m Cedis on the open market in February 1997. Similarly, a standard building plot which sold for 200 Cedis at Akokoamong in 1970 was worth ¢2m Cedis in 1997. Standard building plots at Emena and Atasamanso varied between ¢3.5m to ¢10m per plot in 1997. The comparatively higher land values reflect more favorable locations in terms of accessibility, availability of infrastructural services, water, electricity, telephone, markets, etc. In 1997, monthly rental values for single rooms measuring 12 feet by 12 feet in the study villages varied between ¢1,000 and ¢5,000.

Further research Kasanga and Kotey, 2001 showed that, the preparation and approval of a planning scheme mark the end of agricultural landholdings for women and men alike. From the community survey, it was only at two villages, Esereso and Emena, that public forums were held to brief community members on the impending conversion of their farm lands to housing and urban related uses. As and when planning schemes are prepared and approved, most lack the ability to keep control of their agricultural lands. The survey found that 58 per cent of single women, 68 per cent of married women, 61 per cent of divorcees and 64 per cent of widows had lost land. Similarly 56 per cent of single men, and 68 per cent of married men, had lost land.

Housing remains the predominant land use in the land conversion process. Between 50 and 73 per cent of all the respondents, female and male alike, affirmed that their lands had been converted to housing. Mixed land uses were, however, substantial. Residential and commercial land allocations are supposed to be backed by leases ranging from 50 to 99 years. Overall, the following conclusions may be drawn:

i. Communal lands are fast changing to individual ownership.
ii. Community lands are changing hands from indigenous people to migrants.
iii. Customary freehold interests are being extinguished in favor of limited leasehold interests for migrants and indigenous folk alike.
iv. Consequently, indigenous people are moving from absolute security of tenure, to insecurity of land rights for agriculture as well as housing (Kasanga and Kotey, 2001).

The displacement of indigenous people, without compensation has resulted in some disquiet, misunderstanding, and sometimes open hostility between displaced families on the one hand, and traditional land custodians and new developers on the other. At Atasomanso, a developer had to pay compensation to a displaced family prior to the commencement of building operations on a plot he had legitimately leased from the chief. The uncertain and precarious nature of the compensation claims do not augur well for cordial long term relationships between the new developers who are largely migrants and the displaced indigenous people.

It is therefore very evident from the literatures above that, with growing urbanization and increasing population size of rural communities, customary lands that are previously used for agricultural purposes are sought for developments. These developments are mainly for commercial and residential purposes. These studies, however, seeks to undertake similar examination in the study area (Wa Municipality), since research works on the demand for customary lands for residential purposes has little focus in the area.

2.3 The Concept of Price, Worth and Value

Price is the output of the occurrence of supply and demand (Aliyu, 2012). Given any level of supply and any given demand, price will change to yield an equilibrium point at which the amount in supply matches the quantum of demand (McParland, McGreal and Adair, 2000). Based on the above affirmation, if the demand for a land and landed property falls and supply remains constant, price will also fall until it moves people for whom price was previously a barrier to enter the market. In a reversed situation, if the demand for land and landed property rises then price will rise too (Adair, McGreal and Vos, 1996). The above affirmation has some discrepancies because price is sometime being arrived at by looking at other parameters that could not necessarily be demand and supply. This could be some attributes of location. The assumptions on which the pricing model is deemed to work, according to McParland, McGreal and Adair (2000) are that:

There are multiplicities of separate economic actors, so that no one individual can influence the operation of the market;

- There is homogeneity of product;
- All participants are both rational and perfectly informed; and
- There are no barriers to entering and exiting the market;

This is of course a very simplified explanation, and it does not relate easily to the real estate market. Real estate is a unique commodity in that its supply is fixed in overall terms, though not in relation to its specific use. It is also unique in that each unit of land or building is individual, in terms of location if nothing else, and it is therefore said to be a heterogeneous product. On the issue of price of land and landed property, the findings of Warren, (2000); Brown and Matysiak (2000); St Lawrence (2003), Parnell and Sayce (1999) deserve academic credit.

This development process is constrained both by the nature and extent of demand and by possible and actual physical, legal, financial, political and planning restrictions (McAllister, 1995). From the emphasis above, it is not surprising that the land markets have given rise to a complex set of models and theories as they seek to deal with the effects of legislation and the lack of perfect knowledge that interfere with the ‘pure’ operation of the market mechanism. For a fuller explanation see, for example, Ball et al., (1998), Eccles et al. (1999; Warren (2000) and Harvey and Jowsey (2003).

In summary, the economics of land and real estate markets is particularly complex due to:

- The relatively fixed nature of land and landed property: whilst fixed in physical terms, the availability of land for use will alter depending on land use planning regulations; it is therefore capable of change over time.
- The nature of legal interests: unlike other assets, property can be held in many ways and, strictly speaking within the UK, it is not held outright as all title is vested in the Crown (Fraser, 1993). In legal terms, the owner holds an ‘interest’ in land. This can be freehold (full legal rights to deal with the asset as the owner wishes subject only to planning and other statutory restrictions); leasehold (the owner has an interest in the asset for a fixed term only and on terms that are set by a legal relationship between the freeholder and the lessee); or (following the passing of the Leasehold Reform and Commonhold Act 2002) commonhold, whereby a joint ownership may be achieved (Davies et al, 2000). Currently there is little analysis of the likely effects of commonhold, given its recent introduction in 2004 as cited by Bootle and Kalyan (2002).
- Heterogeneity: the nature of the commercial property markets is that each property will be different; not only is the location unique, but properties also tend to differ in size, shape, specification and amenities (Adair et al, 1996). This leads to difficulty in comparing one with another and hence in achieving consistency within any pricing model.
- The motivation of ownership: real estate may be owned as a resource within which to carry out economic or social activity or as an investment. Basically, it is the ability and capacity to provide utility that drives the economic worth of the asset (Brown, 1991). However, the demand for land and landed property is a derived demand; it relates to the surplus that can be achieved through its usage. To the investor, however, it is not the utility of the asset that matters directly but the security of income flow that can be achieved through rent (Zubrinsky, 2001). Investors are also concerned not just with cash flow security but with capital security and the prospects for both the cash flow and capital growth. This is the reason why investments in areas that are prone to violence will end up in running at lost. Perhaps the capital invested in such areas cannot be regained. Against this they will balance the risks of default and the attractiveness and likely returns available through investment in other asset classes, such as equities and bonds (Baum and Crosby, 1995).

The word ‘worth’ is used to refer to the cost of an item when it is bought or sold’. A particular house may be worth several cedis in real estate market. In such cases, worth determines how much a particular house will sell in the market. The word ‘worth’ is used in the sense of the cost of production’ of a particular thing.

On the other hand. The word ‘value’ is used to stress the significance and the importance of a particular thing. The word ‘value’ is used in the sense of ‘importance’. Property value concerns how much the property is worth in the market, in other words, what the general buyer population would be willing to pay for that specific property at a specific point in time.

The concepts of worth and value and their relationship to price are relevant issues within the operation and regulation of real estate markets (Eccles et al 1999). In addition, in other countries there may be little or no distinction made between these words (for a discussion of this in a great details see Adair et al., 1996). There may be major differences in practice: for example, in the UK, valuations are undertaken by a valuer and an appraisal is undertaken by an appraiser or property investment surveyor advising the purchaser or employed by the purchaser, whilst in the US an appraiser undertakes both valuations and investment appraisals (Gelbtuch, Mackmin and Milgrim, 1997).

However, in the context of value, price and worth, Hoesli and MacGregor (2000) distinguish between four different concepts:

- Price is the actual observable money exchanged when a property investment is bought or sold. In most other markets price is given, but in the property market every property interest is different and requires an individual estimate of value to guide the buyer and seller in their negotiations to agree a price. Price can be fixed by negotiation, through tender bids or at auction.
- Value is therefore an estimation of the likely selling price. In other markets, where homogenous goods are sold, the price is not estimated but is determined from market trading and is usually used to describe an assessment of worth.
- Individual worth is the true value to an individual investor using all the market information and available analytical tools and can be considered as the value in use.
- Market worth is the price a property investment would trade at in a competitive and efficient market using all market information and available analytical tools (Waddell, Berry and Hoch (1993). A valid model of calculation of market worth should reflect the underlying conditions of the market at the time.

The next Chapter offers an outline the research design and methodological aspects of this research. This is essential because it helps in positioning research philosophy, implement research questions and determine research approach as well as research techniques.

CHAPTER THREE

Methodology and Study Area Profile

3.1 Introduction

This Chapter provides an outline of the ‘what’, ‘how’ and ‘why’ of the data collection, analyses and presentation processes. The various methods and techniques of data collection and analyses as well as the rationale for their choices are also explained here.

3.2 The Research Approach

The study relies on both quantitative and qualitative approaches. This is because several researchers have argued that both quantitative and qualitative methods of enquiry can be used complementarily in social research (Neuman, 2003; Bryman, 2001; Hakim, 2000). Indeed, Hammersley (1992) argued that the qualitative-quantitative divide is artificially polarized, disguising both methodological similarity and diversity in consequence. Schwandt's (2000:210) also asserts that:

“All research is interpretive, and we face a multiplicity of methods that are suitable for different kinds of understanding. So the traditional means of coming to terms with one's identity, as a researcher by aligning oneself to a particular set of methods is no longer useful. If we are to go forward, we need to get rid of that distinction”.

In line with Schwandt's view, I adopted a Mixed Research Design which has been defined by Johnson et al. (2007:123) as the type of research in which a researcher or team of researchers combine elements of qualitative and quantitative research approaches (e.g. use of qualitative and quantitative research viewpoints, data collection, analysis, inference techniques) for both broad purposes of breadth and depth of understanding and corroboration. This complementary use of approaches makes data richer and more public worthy (Yin, 2003).

While quantitative research mainly involves surveys and experiments for data collection and mathematical analysis and presentation of issues in the form of percentages, tables and distributions among others, qualitative research is more explanatory and descriptive. Summarily, qualitative research refers to the meanings, concepts, definitions, characteristics, metaphors, symbols, and descriptions of things while in contrast quantitative research deals with the counts and measures of things (Brockington and Sullivan, 2003; Mayoux, 2006; Berg, 2001).

This study used both methods so as to benefit from the advantages of both methods. Social sciences phenomena are better investigated, if both methods are used effectively (Strauss and Corbin, 1990; Neuman, 2003; FHI, 2005).

3.3 Selection of Study Region and Communities

The study region and communities were purposely selected for this study. Purposive sampling is defined by Maxwell (1997:87) as a type of sampling in which, "particular settings, persons, or events are deliberately selected for the important information they can provide that cannot be gotten as well from other choices".

3.4 Research Location

The research location is the Upper West Region of Ghana and the study focuses on seven (7) communities - Kpaguri, Sombo, Kunfabiala, Airstrip, Mangu, Konta and Bamahu- in the region for in-depth studies and to make inductive analysis therefrom. The Upper West Region was selected because it is appropriate for the main variables of the study and for the sake of proximity for easy access and collection of data in accomplishing the study on time. Upper West is a fast growing region with massive residential structure developments and the ease of conducting the research as students due to resource availability. This is because there is high demand for residential properties in Ghana as a result of growing population. This has created a huge housing deficit in the various region of the country of which Upper West region is no exemption.

The people of the region have a similar style of architecture. Houses are constructed mainly with mud, with mostly rectangular rooms unlike in Upper East where rooms are predominantly rounded. The architecture of the region has been influenced by the Larabanga Mosque which was built by the Moslem immigrant traders from the Northern Africa mainly Mali, who later settled in Wa (Upper West Regional Coordinating Council, 2006).

The houses are built in the form of compounds with gates and with walls plastered with mud with cement as the main material of the floor. The rooms are mostly decked with mud, and in certain instances, houses are built up to one-storey and roofed with iron sheets or thatch from grass. Most of these locally constructed storey buildings can be found within the chief’s palaces, all over the region.

The region covers a geographical area of approximately 18,478 square kilometers with a population of 576,583. This represents about 12.7% of the total land area of Ghana. The region is bordered on the North by the Republic of Burkina Faso, on the East by Upper East Region, on the South by Northern Region and on the West by Cote d’Ivoire (Songsore and Denkabe, 1995; Kunbour, 2003; Upper West Regional Coordinating Council, 2006).

3.5 Case Study Areas

The seven communities (Kpaguri, Sombo, Kunfabiala, Airstrip, Mangu, Konta and Bamahu) were purposively selected for the study because of their peculiarity in residential real estate characteristics. The pursuit to identify an area full of different types of residential properties such as compound houses, self-contained houses and single dwelling houses as well as considering some locational factors such as closeness to the Central Business District (CBD), other access route, amenities and others are the main reasons for the selection of Kpaguri, Sombo, Airstrip, Mangu, Konta . The area was also chosen as a study area because of its unique indigenous political system that empowers the Chief to be custodian of the people and lands in the area of his jurisdiction. Thus, there are no separate traditional offices between the chief and Tindaana in many areas of the traditional area (Bebelleh, 2008). This is contrary to the widespread belief that customary land administration in the region is characterized by the Tindaana complex, which operates alongside the chief (Kasanga, 1996; Dittoh, 2004). Bamahu and Kunfabiala are chosen because of two main reasons. First, they are the communities with the fastest growth in respect with residential development in Wa. Second, they were purposively chosen as a study community because of the existence of the university. Findings from this community enabled us to compare and contrast the impacts of the university on residential growth pattern in Wa.

3.6 Data Collection Techniques

Generally, there are two sources of data in social research. These are the primary and secondary data sources (Flick, 2002; Pannerselvam, 2007). Both sources were extensively implored by this research. Secondary data sources were collected from the database of some land sector agencies, journals, articles and research reports from government agencies while primary data were acquired from the field by the techniques discussed below:

3.6.1 Questionnaire administration

Questionnaires consist of well-formulated questions to probe and obtain responses from respondents (Twumasi, 2001; Karma, 1999; Panneerselvam, 2007). They can be divided into structured and semi-structured questionnaires. While structured questionnaires provide predetermined closed-ended answers for respondents to choose from, in semi-structured questionnaires, open-ended questionnaires are used and respondents are at liberty to give any answers. (Karma, 1999; Twumasi, 2001)

In this research, both structured and semi-structured questionnaires were used to ascertain generic views about Locational choices and socio – economic characteristics on their choice of a residential property type in the study areas. The use of structured questionnaires was supplemented by open-ended questionnaire for both formal and informal institutions to get deeper insights from them on residential property development.

Household heads were also administered with both the structured and unstructured questionnaires in study communities. For the purpose of this study, a household is; a person or group of persons who live together in the same house or compound, share the housekeeping arrangements and are catered for as one unit.

In all, 40 questionnaires were administered in all seven (7) communities in the study region to at least 20 households each.

Data analysis is not a separate stage after data collection in the research process, but a continuous and simultaneous process (Yin, 2003). There were therefore debriefing after each day's data collection to find emerging trends and relationships. This is because, I adapted de Vries (1991) style of recollecting the day's field activities, consisting of conversations, interviews and events recorded and try to connect the bits and pieces if any. Issues which required further probing were investigated further while on field. Before leaving a case site, key issues were presented to a cross section of the population for validation.

Similarly, imputations of quantitative data from questionnaire were done weekly on the field while statistical analyses of data were done on return from the field. quantitative approach in the form of structured questionnaires were used to collect data, and quantitative data analyses were done by the use of the Statistical Package for Social Sciences (SPSS) pertaining to demography, correlations between variables and anything quantifiable, qualitative data collection and analyses provided in-depths into the what, how, when and why between the study variables and issues within the socio-cultural contexts of the areas. This made the analysis of data more comprehensive and informative.

The option to lean more towards qualitative research is because qualitative research permits the researcher:

“to wear wider lens spectacles that enable him to see both context specific issues and the phenomena as it exists and functions within each individual community environment and in relation to other on-going phenomena” (Bacho, 2001: 78/79).

3.6.2 Quality Control for Data Reliability and Validity

Validity is the extent to which a measurement technique measures what it purports to measure. That is the appropriateness and usefulness of the specific inferences (American Psychological Association, 1985; Schweigert, 1998). To ensure reliability and validity, the mixed methods approach as well as a multiple data collection method is adopted to triangulate issues. In addition, daily recap, of main issues and follow-up on issues of controversy on field, as well as validation of main findings in the case study community are all to ensure that data collected are valid and reliable.

The research was cognizant of the sensitivity of people disclosing socio – economic and property information and as such developed a strong rapport made with community leaders and elders on the purpose of the study.

3.6.3 Data Management

Secondary data collected were photocopied and securely put in files while soft copies were saved in different computers as back-ups. Daily Summaries out of key issues from the field were typed out and saved with back-ups on computers. Field notebooks were kept safely and respondents' information compiled for easy retrieval. Computer entries were made weekly from the structured questionnaires into the SPSS data base system.

3.7 Stages of Research

3.7.1 Reconnaissance Stage:

This stage involved reading and discussing broad issues on residential properties, population and socio – economic factors which afforded the opportunity to choose both the topic and the study area. It is at this stage that I made preliminary visits to some communities which culminated in the choosing of the study communities. It also included the writing of the research proposal and data collection instruments, pre-testing of the instruments as well as the review of literature.

3.7.2 Main Survey Stage:

The main Survey stage involved the actual collection of data from study communities and institutions. It was essentially the primary data collection stage but it also included preliminary data analysis in the form of daily field data collection debriefing and summaries.

3.7.3 Analysis Stage:

This is the stage where all data collected were systematically analyzed to bring to light the relationships between the various variables in the study. Qualitative data collected were coded and inputted in the Statistical Package for Social Sciences (SPSS) for analysis.

Primary data were structured into themes according to the objectives of the study for analysis and presentation.

CHAPER FOUR

ANALYSIS AND DISCUSSION OF RESULTS

4.1 Demographic Characteristics of Respondents

Certain important attributes of the tenants and landlords’ respondents emerged from the analysis of the field survey data and these include the gender, age distribution and marital status of respondents. A total of 280 people consisting of 140 landlords and 140 tenants from the various communities were interviewed through the use of questionnaires.

4.1.1 Gender and Age Distribution of tenant’s respondents

Out of the 140 tenants interviewed 48.6% are males and 51.4% are females.

Fig. 4.1 Gender Distribution of Tenant respondents

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

Out of the 140 tenants interviewed, 96 of them are below 30 years, 36 of them are between the ages of 30 to 55 years, 6 are between the ages of 56 to 70 years and the remaining 2 were above 70 years.

Table 4.1 Age Distribution of tenant’s respondents.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

4.1.2 Gender and Age Distribution of landlord respondents

Fig. 4.2 Gender Distribution of landlord respondents

Source: Field Data, (2018)

As shown in the diagram above, out of the 140 landlords interviewed, 63.6% are males and 36.4% are females, these shows that most of the property in Wa municipality are owned by males.

Out of the 140 landlords interviewed, 31 of them are below 30 years, 74 of them are between 30 to 55 years, 27 of them are between 56 to 70 years and the remaining 2 were above 70 years.

Table 4.2 Age Distribution of landlord’s respondents

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

4.1.3 Educational Background of Landlords and Tenants Respondents Landlords

The educational background of landlords’ respondents reveals that, 27.86% had up to basic level, 3.571% had up to vocational/technical education, 14.29% had up to SHS/vocational level and 30.71% had up to tertiary education and the remaining 21.43% received no formal education. This is shown in the chart below.

Abbildung in dieser Leseprobe nicht enthalten

Fig. 4.3 Educational Background of Landlords

Source: Field Data, (2018)

Tenants

The educational background of tenants’ respondents reveals that, 17.1% had up to basic level, 5.0% had up to vocational/technical education, 26.4% had up to SHS/vocational level and 40.7% had up to tertiary education and the remaining 10.7% received no formal education.

This is shown in the chart below.

Fig. 4.4 educational background of tenants

4.1.4 Occupational Background of Respondents

Tenants

The tenants’ respondents have about 7.9% of the respondent are farmers, 0.7% are engaged in hunting activities and 91.4% are others employed in areas such as the health service, petty trading, teaching, driving, hairdressing, unemployed people students, and other small scale manufacturing activities etc. This is shown in the table below.

Table 4.3 Occupational Backgrounds of Tenant Respondents

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

Landlord

The landlords’ respondents have about 18.6% of the respondent are farmers, 0.7% are engaged in hunting activities and 79.29% are others employed in areas such as the health service, petty trading, teaching, driving, hairdressing, unemployed people, and other small scale manufacturing activities and others. This is shown in the chart below.

Table 4.4 Occupational Backgrounds of Landlord Respondents

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

4.2 Locational attributes of housing

Many locational attributes were considered in this research (Table 1). They include: Location and access to road network, closeness to the central business district, topography and availability of amenities like sanitation facilities, security facility and systems, electricity, water, educational facility, green spaces, medical facility, recreational centers, mobile network, shopping areas and drainage and sewer lines. The choice of the aforementioned variables was based on their importance to the explanation of locational effects on the choice of location and house values. Previous studies like Blomquist and Worley (1981), Nelson (1978), Linneman (1981), Casetti (1986), Can et al., (1989), Arimah (1990), Aluko (2008) have used some of the variables. Also, the concentration of workers in the CBD is no more important as there are multiple-nuclei centers in Wa Metropolitan. The importance of each of the attributes is very essential for the selection of a particular location. The importance of each of the amenities is very essential for the selection of a house.

According to the analysis as shown in the table (4.5) below, the respondents were asked what motivates or motivated them to live in their present neighborhoods. The reactions given vary over the neighborhoods. While 35.9% of the tenant respondent in the study areas believe that availability of water motivates or motivated them to live or continue to live in the locality, 22.5% said they are motivated because of electricity supply. 13.4% indicated road network and accessibility as the amenity that influence their choice of location, these clearly signifies that water supply (freely available water) is the most important amenity that motivates or influence tenants in the choice of houses and location that is tenants mostly prefer living in areas that they will easily have access to water. Next to availability of water in other of motivation or influence is electricity supply, road network and access, sanitation facilities, medical facilities, educational facilities, others such as free and easy access to land and other amenities such as Telephone network, Security systems, shopping areas and Recreational centers also influence or motivates the choice of location.

Table 4.5 Ranking of Available Amenities Influencing Locational Choice

Abbildung in dieser Leseprobe nicht enthalten

Source: Field Data, (2018)

4.3 Factors that Influence the Value of Residential Properties

According to the relevant literature in the field recent empirical studies have investigated substantial lists of factors to explain market rent for residential properties. These factors range from physical attributes to amenities, services and property management characteristics. As explained in the literature all those factors can be rearranged as appropriate to the case study area and illustrated as follows. But for the purpose of this study, I seek to examine the Rent by the following variables:

Abbildung in dieser Leseprobe nicht enthalten

Socio – Demographic Characteristics are further divided into gender, the age, marital status, occupation, level of formal education and the average income of the respondents. The gender is further divided into male, female and others, marital status also divided into single, married, divorced and others.

Building Characteristics are further divided into building type, amenities, responsibility of maintenance. Building type includes the number of units in the structure and age of the building. Size of rental unit includes number of rooms, number of baths and number of bed rooms, basis of repairs and maintenance.

Locational Characteristics are further divided into location choice motivators, neighborhood rate (perception), challenges affecting the neighborhood, the tenant’s option of the neighborhood and whether or not crime is perceived to be a problem. Additional variables included are the presence of abandoned buildings and noticeable litter.

Landlord Experience is also further divided into investor’s age, years of experience and number of properties owned. This application is most applicable in this study, because some tenants included in the sample are sharing amenities and services with land owner.

Table 4.6 Determinants of the Rental Value of the Residential Properties

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

Analysis of the Relationship of the Factors Affecting Rental Values in Case Study Area Multiple regression models were used in the analysis to determine the interrelationships between each of the factors. The dependent variable was the rental value of the residential property whereas SDC, BC, LC and LE were taken as independent variables. The model is not only capable of handling the relationships but also it support to inform the contribution or the importance of each variable to the explanation of the variation in the dependent variable. It also allows for the prediction of value of the dependent variable.

From the graph below, it can be seen that there is significant relationship between SDC, BC, LC, LE and the Value (rent) of residential properties. This also suggests that, the independent variables in the function Y = (SDC, BC, LC, LE) has a bearing on Value. From the graph it is seen that, the plotted points are not too far from the normal and flows uphill from left to right hence significant in the prediction of Value in the study.

Fig.1.1 Graph Showing the Correlation between Value (Rent) of Residential Properties and Determinant Factors (SDC, BC, LC, LE).

Fig.4.5 Correlation between Value (Rent) of Residential Properties and explanatory variables.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

The equation of multiple regression Y (dependent variable) on X1, X2, X3, X4,…..X (Independent variables) is given as;

Abbildung in dieser Leseprobe nicht enthalten

Where,

X1, X2….Xn = the independent variables b 1, b2….bn =Multiple regression coefficients for the independent variables (the slope of the regression line) “e” = an error term which points to the fact that a proportion of the variance in the dependent variable Y = Unexplained by the regression equation.

Thus, the application of the model to the case study shows that;

Abbildung in dieser Leseprobe nicht enthalten

Regression Results between Annual Rent (Per Property) and Factors Affecting Rental Values According to the regression results, it shows that Locational Characteristics is the most determining variable in the rental values of residential properties with 39.3037% in terms of Variance. Within the LC, Topography is the highest determinant with of rental values with 6.3001%. This is followed by Landlord Experience with 24.9896% in Variance, under this, the perception of the property to be a home for relatives and friends is the highest determining variable with 12.6736%.The next in order is the Building Characteristics with 5.5845% in Variance, under this also; Electricity is the highest determining variable with 0.6561%. The final variable in the order is the Socio – Demographic Characteristics with 1.1335% in Variance, under which, Gender is the highest determining variable with 0.4489%. However it is important to note that, the Partial Correlation Coefficients predicts none Standardized Variance and not unique ones.

To ascertain the uniquely predicted and highest determinant of Value (rent), I employed the Part Correlation Coefficients. This tells us the determinant factor that predicts the standardized and unique variance without errors. From the regression results table, it can be seen that, Socio – Demographic Characteristics – SDC accounts for uniquely 0.5553% of the model study, Building Characteristics – BC accounts for 2.7083% uniquely, Locational Characteristics – LC accounts for uniquely 19.0843% and Landlord Experience also uniquely accounts for 13.1597%. In standardized and unique terms, the predictive variables (SDC, BC, LC and LE) can be ranked as thus: in descending order – LC, LE, BC, and SDC respectively.

Table 4.7 Summary of multiple regression of explanatory variables and residential property values.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

Abbildung in dieser Leseprobe nicht enthalten

The model, R^2 (0.517) shows that about 51.7% of the variation in rental value are jointly represented by the variables in this analysis whiles the remaining 48.2% of rent is determined by other variables that was not captured in the survey. And also a predictive power loss from (0.517 to 0.211) when apply the model to a different sample size. The unstandardized coefficients value of the independent variable depicts the degree of each variable influence to the rental value of an annex in the area. Regression Results between Annual Rent and Factors (SDC, BC, LC and LE) affecting Rent (Value)

Table 4.8 Statistics of Regression of residential Property Values and the explanatory variables.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

Y = a + bX = b1SDC1+b2SDC2+b3SDC3+…+b6SDC6 + b1BC1+b2BC2+b3BC3+…+b7BC7 + b1LC1+b2LC2+b3LC3+…+b16LC16 + b1LE1+b2LE2+b3LE3+…+b8LE8

From the coefficients of the Regression table: a = 1361.623 and the regression equation is as follows,

Y = 1361.623 + [- 83.526*SDC1 -1.965*SDC2 + 35.926*SDC3 + 23.227*SDC4 + 7.899*SDC5 + 23.034*SDC6 - 274.198*BC1 - 120.803*BC2 - 456.938*BC3 + 318.032*BC4 + 101.432*BC5 - 39.569*BC6 + 84.85*BC7 - 163.056*BC8 + 29.549*BC9 - 183.574*LC1 + 261.019*LC2 - 167.69*LC3 + 63.393*LC4 - 385.083*LC5 + 43.542*LC6 - 242.543*LC7 + 2.707*LC8 - 179.401*LC10 - 1321.748*LC11 + 397.318*LC12 + 379.338*LC13 - 218.865*LC14 + 96.353*LC15 + 11.447*LC16 + 1267.673*LC17 - 418.564*LC18 - 119.612*LC19 + 296.803*LC20 + 30.965*LC21 - 414.628*LC22 + 153.966*LC23 - 149.844*LC24 - 140.626*LC25 + 31.896*LC26 + 3.256*LE1 - 42.802*LE2 + 22.821*LE3 + 467.889*LE4 + 486.721*LE5 + 1023.301*LE6 - 1847.153*LE7 + 66.504*LE8 - 27.63*LE9]

According to the result of the step wise regression two of the determinants are very crucial for the determination of rental value. Locational Characteristics – LC with a unique part coefficient of 19.0843% and Tenants leaving before end of tenancy as it highest predictive variable with the regression coefficient of 1267.673. And secondly Landlord Experience – LE with a unique part coefficient of 13.1597% and the property as somewhere a relative or friend can live as it highest predictive variable with the regression coefficient of 1023.301. These two variables are together represents R^2 value as 0.517 and it pointed out that about 51.7% of a magnitude, are contributing to the rental values in the study model.

4.4 Summary Statistics of Regression of Socio-Economic Characteristics and Choice Building Type.

From the graph below, it can be seen that there is a significant relationship between Socio – Economic Factors (Occupation, Education, and Income) and the Choice of residential properties. From the graph it is seen that, the plotted points are not too far from the normal and flows uphill from left to right hence significant in the prediction of Value in the study. It is also important to note that, the ANOVA significant coefficient is less than 0.05 which indicates that, the model is accurate in predicting the outcome of the study.

Fig 4.6 Correlation between socio-economic characteristics and residential property type.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

From the table below, it is also clear from the Collinearity Statistics that, the Tolerance coefficient is significantly higher than 0.1. This means that there is no Multi – Collinearity and hence no other variable in the model predicts the outcome better than these variables. Also it would be much concern indicating Multi – Collinearity if the (Variance Inflation Factor) VIF of the model is greater than 10. But from the table, the VIF’s are significantly below 10, this also means that the variables correctly predict the outcome in this model.

The Unstandardized Coefficient’s explains the magnitude of influence added to the decision to choose a residential property type when there is improvement in the Socio – Economic factors. From the table, Education adds 0.09, Occupation adds 0.011 and Income adds 0.137 to choice of a residential property type. From the Standardized Coefficients, is the amount of prediction each variable or predictor is making to the outcome. The Partial Coefficients tells us the standard variance of each predictor while that of the Part gives the standard unique predictions of the variables. From the table it seen that, Education contributes a variance of 3.0625%, Occupation contributes 0.0081% and Income contributes 2.6569% and standard unique contributions of 2.89%, 0.0081% and 2.5281% respectively.

From the above finding, it can be seen that, Education is the major influencing factor in the decision of choosing a residential property type with 2.89% followed by Income with 2.5281% and Occupation with 0.0081%. The findings suggest that, in the study area, the level of Education of the population influences the choice of residential property type followed by their Income levels and subsequently their Occupation.

Table 4.9 Statistics of Regression of building type and socio-economic characteristics.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

From the Model Summary table, R^2 = 0.077 Adj. R^2 = 0.056 N = 3

The R^2 (0.077) shows that about 7.7% of the variation in the choice of residential property type are jointly represented by the variables in this model. This also shows that, there are varied variables which account for the remaining about 91% in the study area. And also a predictive power loss from (0.077 to 0.056) when apply the model to a different sample size.

Table 5.0 Model Summary of Regression of residential properties and socio-economic characteristics.

Abbildung in dieser Leseprobe nicht enthalten

Source: Field data, (2018)

CHAPTER 5

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.0 Introduction

This chapter discusses the major findings from the work, the conclusions drawn from the findings, as well as recommendations to the components of examination of the study and the respondents of the area of study.

5.1 Summary of findings

1. Multiple Regression analysis of housing attributes (locational) were combined with other attributes like building characteristics, socio-demographic characteristics and landlord experience was regressed and 49 variables were entered as predictor variables. The R^2 = 0.517 representing 51.7% of the variation in rental value are jointly represented by the variables in this analysis. This is an indication that there is a high significant relationship between the variables and house values, for the variables explained 51.7% of the spatial variation in housing values. It was found out that among the variables used, Locational Characteristic is the most determining factor of residential property values (Rent) in the study community. Landlords and Tenants take into consideration Locational factors which determine the amount of rent they set and are willing to pay respectively. It was seen that, tenants leaving before the end of tenancy period is a factor that landlords consider the most when setting up their rent or property values.
2. Regression of explanatory variables (Education, Occupation and Income) showed that among the Socio – Economic factors used, Education is the most determining factor that influences the choice of residential property type in the study area with a Partial value of 3.0625% (0.0175^2 *100). It indicates that, the level of education of the population influences their choice of a residential property type.
3. The study confirms that the availability of water in various housing units is the most important amenity tenants consider before renting a house (unit) or choosing a particular location to rent a housing unit in the Wa municipality. From the personal interviews with the respondents, they revealed that an amenity like water is very essential and without it doing household chores become difficult and therefore is considered a priority when choosing a residential property in a specific location. This is the important amenity using a scale of preference in choosing a residential location to put up a unit.
4. Another key finding from the study was that, most of the landlords and tenants respondents had tertiary education (graduates) making their choice of locating a housing unit or renting a unit more reliable because they have an in depth knowledge about the rise in housing values considering some factors which is more reliable when choosing a location to build a housing dwelling either for investment purpose or for owner occupier purpose.
5. It was discovered that men (males) dominated the landlords respondents thus the age distribution of the males represent 63.571%. Interestingly, the study revealed that most of the men put up housing unit than women meaning gender disparity still existed in access to land and property ownership. Considering the seven (7) communities which was chosen in the area of study, the male still enjoyed the superiority in various access to land and to own property.

5.2 Conclusion

This study set out probe, by testing the effects of location on the values of residential properties in the Wa Municipality. It was very necessary to set out an objective to establish the degree to which the respondents had an idea about locational characteristics of an area and how it could be a strong medium to rising residential properties values in the designated suburb of study. The study focused on participating landlords and tenants’ examination on the effects of location or locational characteristics in putting up a housing unit or renting a housing unit. In addition, the relationship between the explanatory variables and contributions of location and other explanatory variables like building characteristics, socio-demographic characteristics and landlord experience to variability in residential property values were determined and models for predicting the variability derived.

The overall results show that there are significant variations in virtually all the entered variables. There are spatial variations of locational attributes on residential property values. The variability is much more experienced within group means than between group means. That is, there are lots of variations for individual houses within the same locations. However, why some variable show high variability in the different location, some are not significant. The above analyses have proved the important role of location on residential property values. The significant variations in almost all the variables in the different neighborhoods could be attributable also to the various locational differences which exist in the housing structures.

It is hopeful that the research would stimulate other studies particularly from the Estate Surveyors and Valuers and that the results and findings would be found to be useful contribution to knowledge. This study has expanded the research frontier in estate management by introducing new dimensions and concept in the area of residential properties. In particular, it has reinforced the importance of building characteristics, socio-demographic characteristics, landlord experience and location has on residential property values.

5.3. Recommendation

The following recommendations are made based on the research findings, to point the way forward on the part of the Estate Surveyors and Valuers, the Ghana Institution of Surveyors (GHIS), investors, and the Government.

1. A number of models were derived to explain relationships between residential property value, location and individual explanatory variables. The models would be useful for predicting residential property values along the in the study area. It may become tools useful to Estate Surveyors and Valuers in expressing valuation opinions, and predicting residential property values especially in feasibility and viability appraisal. However, a tool may not be useful until it is put into proper use. It is recommended that practical approach be taken to adopt the models and assist in making reliable judgments that would stand the test of time.
2. This study has shown that water, electricity and road network is an important variable in a location and its impact, in the presence of other variables, on choice residential property location in the study area is great. This implies that, all things being equal, improvement in locational characteristics such as electricity and water supply in the study area will have positive impact on residential property values. This probably could be that provision of water, electricity and road network would encourage more residential property occupiers seek locations along roads and most especially where water and electricity is available in the study area, and increasing demand will bring competition amongst the occupiers thereby values to increase. Governments at all levels should strengthen and make policies to ensure tenants do not leave before the end of tenancy periods and consider the provision of water and electricity to be of great essence. This is because land and buildings are measure of wealth of a nation and enhanced value through provision of water, electricity and good road network will be worthwhile.
3. The study shows that males are mostly landlords in the Wa municipality. I recommend that, the government should educate and empower females so as to make them more interested in housing ownership and know its relevance as to help reduce the housing deficit in the Wa municipality and the country at large.

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APPENDIX A

TENANT QUESTIONAIRE

Dear Respondent,

This study is to solicit your opinions on the topic “effect of location on the values of residential properties in WA Municipality.

It is a survey towards the award of Bachelor’s Degree in Land Management. Kindly be assured of your confidentiality in the responses you give. Thank you.

Tenant questionnaire

A. General Information

a. Name of the interviewer…..

b. Questionnaire No.

c. Date of interview .

d. Community ..

e. Name of interviewee….

f. Tel. …...

B. Socio-Demographic Characteristics

1. Gender..

a. Male{ } b. Female { }

2. Age.

a. below 30 years { } b. 30-55 years { } c. 56-70 years { } d. 70+ { }

3. Marital Status

a. Married { } b. Divorced { } c. Never Married{ }

4. Occupation

a. Farming{ } b. Hunting{ } c. Charcoal production/fuel wood hewing{ }

b. Others (specify).

5. Level of Formal Education

a. Never Attended School { } b. Basic Level (JHS) { }

c. Vocational/Technical Level{ } d. SHS/Vocational Level { }

e. Post-Secondary { } f. Tertiary Level { }

Factors affecting the value of residential properties

C. Building characteristic

1. Type of Building

a. Compound House { } b. Storey Building{ } c. Self-Contain { }

2. What is the number of unit’s in your building? { }

3. What is the age of the building? { }

4. What is the number of washrooms in the building? { }

5. What is the number of bedrooms in the building? { }

6. What are the amenities available in the structure?

a. Electricity { } b. water { } c. telephone { } d. mobile network { } e. wireless internet { }

f. Others (specify).

D. Tenant Characteristics

1. What is the average household income?

a. GH₵ 1-300{ } b. GH₵ 301-600 { } c.GH₵ 601-900 { }

d. GH₵ 901-1200{ } e. GH₵ 1201-1500

f. Others (specify) …

2. What is the household size?

E. Locational characteristics

1. Which of these are available in your residential neighborhood? Please tick as many as available.

a. Sanitation facilities { } b. Road network and access { }

c. Security facilities or systems { } d. Green spaces or green cover { }

e. Drainage and Sewer Lines { } f. Electricity supply { }

g. Water supply { } h. Telephone/mobile network { } i. Shopping areas { }

j. Medical facility { } k. Educational facility { } l. Recreational centers { }

m. If others (specify)

2. Which of these motivated your choice of living here?

NB: Your answer should be ranked from highest to lowest in the form of (1st, 2nd, 3rd..)

a. Sanitation facilities { } b. Road network and access { }

c. Security facilities or systems { } d. Green spaces or green cover { }

e. Drainage and Sewer Lines { } f. Electricity supply { }

g. Water supply { } h. Telephone/mobile network { } i. Shopping areas { }

j. Medical facility { } k. Educational facility { }l. Recreational centers { }

m. If others (specify)….

3. Do you face any problem living in this area?

a. Yes { } b. no { }

4. If “yes”, which of these problems do you face? If “no”, don’t answer (4).

a. Sanitation{ } b. Noise{ } c. Theft / robbery{ } d. Intrusion{ }

e. Lack of privacy { }

g. Others(specify):

5. How long have you lived in this area? ….

APPENDIX B

LANDLORD’S QUEATIONNAIRE

A. General Information

B. Name of the interviewer…..

C. Questionnaire No.

D. Date of interview .

E. Community ..

F. Name of interviewee …

G. Tel.

B. Socio-Demographic Characteristics

1. Gender..

b. Male{ } b. Female { }

2. Age.

b. below 30 years { } b. 30-55 years { } c. 56-70 years { } d. 70+ { }

3. Marital Status

b. Married { } b. Divorced { } c. Never Married{ }

4. Occupation

d. Farming{ } b. Hunting{ } c. Charcoal production/fuel wood hewing{ }

e. Others (specify)…

5. Level of Formal Education

b. Never Attended School { } b. Basic Level (JHS) { }

f. Vocational/Technical Level{ } d. SHS/Vocational Level { }

e. Post-Secondary { } f. Tertiary Level { }

6. What is your average income?

b. GH₵ 1-300{ } b. GH₵ 301-600 { } c.GH₵ 601-900 { }

d. GH₵ 901-1200{ } e. GH₵ 1201-1500

f. Others (specify) …

C. Building Characteristics

1. Which of these amenities were considered in determining the rent of your property? Please tick as many as included.

a. Electricity { } b. water { } c. telephone { } d. mobile network { } e. wireless internet { } f. others (specify)

2. Are you responsible for repairs and maintenance?

a. yes { } b. no { }

3. How has it affected the rent of the property? a. Decrease rent levels { } b. Increase rent levels { } c. None { }

4. What is the basis for the repairs and maintenance? a. External repairs { } b. Internal repairs { } c. Both { }

C. Location characteristics

1. How would you rate the area in which the property is located as a neighborhood for letting a property?

(a) Very good {}(b) good {}(c) average {} (d) poor {}(e) very poor {}

2. Which of these motivated your choice of location?

a. Educational facilities{ } b. Road network and access { }

c. Closeness to central business district {} d. Topography {}

e. Others (specify) ….

3. Which of these issues affect the neighborhood where the property is located?

a. Sanitation { } b. Noise { } c. Theft / robbery { } d. Intrusion { }

e. Lack of privacy {} f. Presence of drug dealers/users { }

4. Have these challenges affects you in letting the property in the neighborhood?

a. Yes {}b. No {}

5. If ‘yes’ which of the following difficulties do you face? If ‘no’ don’t answer.

a. Long void periods {} b. Tenants leaving before the end of the tenancy {} c. Difficulties collecting the rent {} d. Low/falling rent levels {} e. Low/falling property prices {} f. High levels of wear and tear to the property {}

6. Which of the following do you think would be a possible solution to make the neighborhood where the property is located a better place for renting property?

a. Help in finding good tenants { } b. Help or advice aimed at improving standards of management of rented property (e.g. interpreting tenancy law and avoiding disputes with tenants) { } c. Help or advice aimed at improving the physical condition of rented property { } d. Help in finding good tenants { } e. Schemes aimed at improving the health, education, skills and employment opportunities for local residents { }

Others(pleasespecify)

D. Landlord Experience and charges

1. How long have you been a landlord? …

2. How many properties do own? ….

3. Thinking about this property, which of the statements best describes how you (regarded it/regard it today)?

(a) Investment { } (b) My current home { } (c) Somewhere I/my family will live in the future { } (d) Somewhere a relative/friend will live { } (e) Somewhere to house an employee { } (f) Somewhere to house people in need { }

(g) Other ..

4. Thinking of the property as an investment, which of these (was/is) most important to you?

(a) Deriving a current income from rent { } (b) Benefiting from rising property values { } (c) Both (Spontaneous only) { }

5. What is the annual rent of the properties? ..

6. How much will be willing to put your property in the open market for sale if the need arises? ….

75 of 75 pages

Details

Title
Effects of Locational Characteristics on the Value of Residential Properties
College
University for Development studies
Author
Year
2018
Pages
75
Catalog Number
V510784
ISBN (Book)
9783346080653
Language
English
Tags
effects, locational, characteristics, value, residential, properties
Quote paper
Darius Ankamah (Author), 2018, Effects of Locational Characteristics on the Value of Residential Properties, Munich, GRIN Verlag, https://www.grin.com/document/510784

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