CONDOMINIUM HOUSING AFFORDABILITY: THE CASE OF PUBLIC SERVICE EMPLOYEES IN ADDIS ABABA

Abstract

The study assesses purchase affordability and constraints in accessing condominium housing for public service employees. The analysis is based on two categories i.e. academic and non-academic employees in relation to government sponsored condominium housing market. The types of data employed are secondary, transfer cost of condominium units by type and salary scale of public service employees. To determine the purchase affordability, capacity of public service employees’ maximum allowable loan to income or affordable limit (AL) and median income are employed. The analysis based on affordable limit computed in five different payment modalities disclosed purchase affordability is positively affected by reduced interest rate and extended duration of mortgage payment. As a result of this the academic employees are found better than the non-academic employees in purchase affordability. The median income analysis revealed the great majority of the non-academic employees earn below the median income and do not afford to purchase even the cheapest type unit. This signifies the degree of influence of income/salary in determining purchase affordability. Next to income higher interest rate and shorter duration of payment are found to be constraints of purchase affordability for both groups i.e. academic and non-academic employees. To mitigate the challenges of purchase affordability, preferential treatment (reduced interest rate and extended duration of mortgage payment) and alternative delivery strategies such as public provision of serviced land and facilitating access to housing finance are appropriate measures to be considered. Keywords: Purchase Affordability, Public Service, Affordable Limit, Condominium