A Market Nether Logic Nor Theory Explains
The most bizarre aspect of the Ethiopian economy is the constant surge in the prices of properties, particularly in the capital. The fast price growth trajectory which started almost two decades ago has increased its momentum in recent years.
In a properly functioning property market, the trend in house prices is somehow anchored to some economic fundamentals such as real income and rental value. Defying these economic fundamentals, the price of houses, particularly in the capital, is soaring to an alarming level. What is surprising is that the increase in rent is far behind the growth in property value, considerably squeezing the yield (rent/property value). This indicates that there is something serious that has gone terribly wrong.