Moral Hazard Behaviour Among Property Markets Actors: An Analysis Of Its Impact On Real Estate Prices In Kinondoni, Tanzania

By the year 2025, it is projected that over 80% of all Tanzanians will be living in urban areas where formal housing supply is severely constrained. The housing shortage partly attributed to rapid urbanisation which is estimated to be about 6% per annum. Similarly, the failed Government-assisted land delivery systems have been at the core of expanding informal housing. Expanding informality signals a constrained real estate market where formal transactions are biased in favour of the few highly advantaged members of the society. These advantaged members of the urban fabric are not only able to iron out the constraints posed by moral hazards in transactions but can also redress the adverse consequences imposed by informal land and housing deals. Improving formal land title holdings and use in real estate transactions should, therefore, lead to lower transaction hazards which will ultimately attract housing investment in dilapidated inner city neighbourhoods. Questionnaire data for 1514 respondents on property prices and land and housing transactions in Kinondoni municipality for the period prior to 2015 provided an input into the Analysis of Variance to derive the findings of this study. Observations point to a significant market price distortion arising from the use of formal land title documents an indicator that informality parse is not the real source of a constrained real estate market, there are structural constraints in terms of composition and behaviour of actors of the real estate market that need a closer examination. To encourage housing development in dilapidated inner-city settlements, Government induced regularisation programmes must be coupled with structural reforms that targets formal unionisation of informal real estate agents in order to stabilise their lifetime earnings. By so doing, unexpected real estate price hikes may be eliminated in line with formal land and housing transactions leading to more housing investment and more stable real estate prices.