Perceived Level and Determinants of Real Estate Market Instability: Evidence from Lemi Kura Sub-City, Addis Ababa
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Date
2026-08-01
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Addis Ababa University
Abstract
Real estate market instability, characterized by price volatility, supply-demand imbalance and investment uncertainty, poses a significant challenge in rapidly urbanizing cities of developing countries. Despite the growing importance of the real estate sector in Ethiopia, empirical evidence on the magnitude and determinants of market instability remains limited. This study therefore assessed the perceived level and determinants of real estate market instability in Lemi Kura sub-city, Addis Ababa. A mixed-method study design was employed; an analytical cross-sectional survey of 224 buyers/tenants and semi-structured interviews of 10 real estate developers. Purposive sampling and Two-stage cluster sampling techniques were used to select participants for the qualitative and quantitative study, respectively. Quantitative data were collected using structured questionnaires and analyzed using descriptive statistics and multiple linear regressions. Qualitative data were analyzed thematically and triangulated with the quantitative findings. The inferential statistics using multiple linear regressions showed that high property prices, income and employment insecurity, poor housing quality, and political instability were significant drivers of market instability. Conversely, improved urban planning, regulation of land speculation, and application of innovative technologies were significantly associated with lower market instability. Qualitative insights further highlighted those macroeconomic and market pressures such as inflation, currency depreciation, speculative investment behavior, and ineffective market regulations as critical contributors to the real estate market instability. In conclusion, these findings indicate that market instability in Lemi Kura is not a market failure alone but a governance failure, driven primarily by speculative behavior, weak regulatory enforcement, and planning deficits.
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Real estate, housing price, drivers of housing market instability, Ethiopia