This study aims to examine the housing preferences of low-income households living in informal settlements in Addis Ababa, Ethiopia and the conditions under which affordable housing options are accepted.
A discrete choice experiment was conducted among 405 households in two inner-city informal settlements in Addis Ababa. Respondents evaluated hypothetical housing alternatives characterized by rent, location, housing size, floor level and relocation arrangement. A panel mixed multinomial logit model was used to estimate housing preferences, preference heterogeneity, attribute importance, willingness-to-pay and predicted housing acceptance probabilities.
Location and rent are the most influential determinants of housing choice, with respondents showing a strong preference for centrally located and lower-rent housing units. Smaller housing units are generally less preferred, while floor level and relocation arrangements have relatively limited influence on housing choice. The results also reveal important differences across households, with lower-income households being more sensitive to rent increases, larger households showing stronger preferences for larger units and older residents being less willing to live on higher floors.
To the best of the authors’ knowledge, this study is among the first to examine housing preferences among extremely low-income households in Sub-Saharan Africa using a discrete choice experiment. It provides rare demand-side evidence from informal settlements and offers policy insights for housing and redevelopment in rapidly urbanizing cities.
