The 1995/1996 Household Income, Expenditure - (PDF, 101 mb ...

VLA Introduction!
VI.3
This chapter builds on previous research (Cardiff (1996)) on housing
using the 1990/1991 HIECS sample. That analysis was motivated by the news
that the Egyptian government would consider decontrolling rents. Since the
social gains from exposing rents to the free market were already well thought
out by Malpezzi (see, especially, (1984)), it seemed appropriate to survey the
initial housing market conditions in preparation for such a big change. How
had rent control affected the cost of housing services? Or even more simply,
what was the cost of shelter in Egypt? Standard hedonic models were
constructed for the 1990/1991 HIECS data set to compare housing costs for
renters in Egypt. The "normal" rent market was covered by strict and
established rent control provisions. The other market - for furnished
dwellings - characterized a freer market structure. The effects of rent
control on housing service costs were examined empirically by building index
ratios from two quality-adjusted cost vectors evaluated at the sample
averages. After adjusting rental costs by a standard set of housing
characteristics in both markets, I found rent control responsible for all of the
difference in nominal costs between the controlled and free markets.
Since that research the People's Assembly passed two laws which
provide nominal concessions to owners. Law No.4 of 1996 frees rent for all
presently vacant (not previously leased) places. Law No.6 of 1997 applies
only to dwellings used for commercial purposes but, because it attacks the
provision of transference of lease in perpetuity, it sets an important
precedent for testing the mobility of leases. In terms of potential applied
research, given the availability of new validated housing data from the
1995/1996 HIECS, perhaps the most striking aspect is the near absence of
renters characterizing their present dwelling as "furnished." This not only
precludes an updated analysis of the rent-controlled/free-market comparison.
The lack of free-market rents (or, at least, actual responses indicating
"furnished") is a telling signal that the expropriation of dwellings by former
leasers is, de facto, complete.
VI.S Housing in Egypt
It is possible to generalize about shelter characteristics in Egypt,
depending on an urban or rural setting. Urban housing may have many
floors. Immediately after the vestibule one enters the main living room. A
mashrabeya screen might separate this room from the smaller dining room.
There is often a salon, a separate room, off the living room, which is seldom
used except for entertaining; the importance of the salon is slowly coming out
of favor in deference to efficient use of space. Often there is a balcony,
which mayor not be closed as a study. The kitchen is typically a small
cubicle off the main living room. Practically all activity takes place in the
living room, including sleeping. Rural housing can be larger and more open,
1 An earlier version of this chapter was presented at the Middle East
Economics Association meetings of the Allied Social Sciences Association
Conference in San Francisco, CA, January, 1996. The present chapter includes
data and analysis not part of the earlier article.