A Joint Model of Tenure Choice and Demand for Housing in the City of Karachi

Abstract

The paper estimates a joint model of tenure choice and demand for housing for the city of Karachi, Pakistan, using a two-stage estimation procedure. Permanent income and demographic variables are included in the analysis. The study uses data collected at the household level in the city in 1987/88. Results show that ownership rates are high in Karachi. Ownership is more likely with increases in permanent income, age, household size and residence in the Unauthorised Areas. Permanent income, transitory income, age and education of the head significantly affect the consumption of housing both for renter and owner households. Results of the analysis and the estimated income elasticities of demand are comparable and consistent with those reported for other developing countries.