Estimating the determinants of housing quality using standardized core welfare indicators: The case of Ghana

The need for safe, decent and affordable housing has been a major concern for housing policy makers throughout the world. Persistent housing shortages and rural to urban migration are factors attributed to creating excess demand in urban housing markets in Ghana. Inadequate data on key housing characteristics and lack of consensus among economists regarding an appropriate measure of demand for housing characteristics continue to retard developments to meet the housing needs of people in less developed countries.; This study incorporates aspects of Lancaster’s model to examine the relationship between socio-economic and demographic factors and two key indicators of housing quality: a constructed housing quality index and an overcrowding indicator. Cronbach’s alpha and factor analyses were used to evaluate the measurement properties of a newly constructed housing quality index for validity and reliability in assessing housing attributes. The housing quality index was used to identify factors related to housing quality in Ghana. The Chow test of stability was used to assess the need for separate rural and urban housing quality models. Data from the tore Welfare Indicators Questionnaire (CWIQ) of 1997 were used in this study.; Results of the empirical analysis revealed that income, location (rural or urban), marital status and tenure appear to be the principal determinants regarding who occupies physically deficient or overcrowded housing in Ghana. While these findings are consistent with results of housing studies in other developing countries, female-headed households and renters in Ghana have housing quality index scores higher than their counterparts.; These results indicate that supply-side measures might be effective in dealing with the Ghanaian housing situation. For example, creation of housing finance institutions to increase loanable funds and introduction of tax credits for homebuilders could help create more and higher income generating job opportunities. Such policies would increase the availability of affordable housing while assisting in the provision of the means for attaining private sector housing. This study represents a significant step towards identification of a comprehensive and reliable housing quality measure for developing countries.