A Note on Hedonic Price Estimation of Urban Residential Services: A Case Study of Rawalpindi City

A prerequisite for planning in the housing sector, be it urban renewal in slum areas or public provision of housing for the urban poor, is the availability of some indices of consumer preferences regarding the various housing services consumed by them. Such information facilitates decision-making as regards the size, and quality of dwellings which ‘best’ meet the needs of the urban poor. This study estimates the market prices (marginal valuations) of the various housing services consumed by urban households in Rawalpindi City. This is done by regressing rent/imputed rent of the residential units on the different characteristics embodied in the various units. The analysis indicates that the quantitative variable (number of rooms) explains a significant proportion of the variance in the dependent variable (rent/imputed rent). The qualitative variables (electricity, drinking water, garbage disposal and sanitary facilities, type of structure of house); when included in the model contribute significantly to the explained variance in the dependent variable. The analysis reveals (and ‘quantities’) consumer preference for housing services.