Factors Influencing Real Estate Property Prices A Survey of Real Estates in Meru Municipality, Kenya
Omboi Bernard Messah (corresponding author) School of Business & Management Studies Kenya Methodist University P O box 267-60200, Meru -Kenya Tel: +254 724770275 E-mail: firstname.lastname@example.org
Anderson .M. Kigige P.O. Box 111 - 60200, Meru- Kenya Tel 0721401289 E-mail: email@example.com
Abstract Real estate is often used to refer to things that are not movable such as land and improvements permanently attached to the land. Different types of real estate can have very different cyclic properties. Real estates go through bubbles followed by slumps in Meru municipality and some real estate properties take shorter time while others take longer to sell despite that the prevailing conditions seem similar. Several studies done especially on changes in prices of real estates revealed that real estate prices go through bubbles and slumps. The study therefore, investigated factors at play in determining real estate property prices in Meru Munincipality in Kenya. The study investigated factors such as incomes of real estate investors, the influence of location on the price, demand and realtors influence on the price. The study adopted descriptive research design to obtain information on the current status of the phenomenon. Structured questionnaires were used in data collection to obtain the required information needed for the study. The population consisted of all 15,844 registered real estate owners in the 5 (five) selected areas of Meru municipality from which a sample of 390 real estate owners were selected by stratifying the population and then selecting the respondents by use of simple random sampling. The data obtained was analyzed by use of available statistical packages for social sciences to obtain descriptive statistics and a regression model. Findings indicated that incomes alone contributed almost 70% of the variations in prices. Demand alone contributed 20% of the changes in prices of real estate. Location and Realtors were found insignificant in determining real estate prices. A summary regresion showed that the variables consindered could explain up to about 70% of variations in prices. The study recommends that further investigation be done on reasons why location and realtors were not significat in determining real estate property prices in Meru municipality.
Journal of Economics and Sustainable Development ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.2, No.4, 2011 Keywords: Real Estate, Property Prices, realtors, Demand, Meru Municipality ACRONYMS AND ABBRREVIATIONS
CMA: DOM: NAR: NYT: NHC: RCNLD: U.S.A: U.K:
Competitive Market Analysis Days on the Market National Association of realtors New York Times National Housing Corporation Replacement Cost New Less Depreciation United States of America United Kingdom
1.0 Introduction 1.1 Background of the study Theory of price asserts that the market price reflects interaction between two opposing considerations. On one side are demand considerations based on marginal utility, while on the other side are supply considerations based on marginal cost. An equilibrium price is supposed to be at once equal to marginal utility from the buyer's side and marginal cost from the seller's side (Jimmy, 2009). Real estate is a business, not a profession. Real estate is sometimes inaccurately spoken of as a profession, but it is essentially a business. The principal divisions of the real estate business are investment, operation and agency (Kimmons, 2010). These differ from one another according to the aims of the persons engaging in them and the methods by which those persons expect to make their gains There are two kinds of sellers (Capozza et al., 2009); those who can afford to wait for as long as it is...