An investigation of the factors affecting the rental value of houses in Colombo district

Abstract

Colombo is the capital and the commercial district of Sri Lanka where most of the offices, popular local and international schools, and factories are located. Therefore it has the highest population density and a significant percentage of people are living in rented houses. There are many reasons for living in rented houses. The demand for rented houses is increasing rapidly and therefore the prices of rented houses too are increasing. The house owners and those who are seeking houses for rent can use these results to decide the value of their rented house. The main objective of this study was to find out the factors that affect the monthly rental value of a house in Colombo district. Data were collected during the period of November 2010 to March 2011. Weekend Sri Lankan news papers, telephone interviews and local web advertisements were referred to collect data. Simple random sample of size 890 was used in the study. Only the houses with rental values between Rs. 5,000 and Rs. 40,000 were considered because houses with rental values below Rs. 5,000 may not have had many facilities while luxurious houses with more facilities exceeded rental value Rs. 40,000. Dieter (2007) investigated the housing rental rate elasticity of aggregate consumption in the Organization for Economic Co-operation and Development (OECD) countries. They investigated the impact of changing housing rental rates upon aggregates consumption based on yearly data for 18 OECD countries observed between 1970 and 2004.