Abstract
Affordable housing is one of the most important economic indicators of a country. The shortage of affordable housing is not only limited to the city of Makurdi but affects the country as a whole. A major concern pertaining to affordable housing is that it affects mostly the less privileged people in the population who are in the low and middle income groups. The study focused on the shortage of the affordable housing supply in Makurdi Combination of quantitative and qualitative approaches were employed to conduct the research. The quantitative aspect researched on how low and middle income groups are affected based on the numerical variables while quantitative approach focused on the in-depth understand on the opinions and perspectives leading to low housing affordability. The main targeted respondents were the low and middle income groups, housing supply institutions and commercial banks. This study used primary and secondary sources to identify major impediments towards the factors militating against residential accommodation supply in Makurdi. The main research instruments employed to collect information was the questionnaire and an interview guide with selected representatives from the sample. The main purpose of the study is to identify factors that limit supply of adequate and affordable housing in Makurdi, identify challenges and obstacles housing supply institutions and individuals face as a result of inflated housing prices. The study concluded that scarcity of serviced land and financial constraints are the main contributing factors to shortage of affordable housing. Research recommends comprehensive and enforceable housing policies, programmes and the related strategic actions to be taken to ensure development of an appropriate housing provision system. Furthermore, developing an appropriate law and regulations structure that governs factors militating against residential accommodation supply, its development, infrastructure and funding, use of cheaper construction materials and technologies can improve and increase the factors militating against residential accommodation supply in Makurdi.
Chapter 1
Introduction
1.1 Background of the study
Since Nigeria’s independence in 1990, shortage of affordable housing for low income earners has been seen as political issue and as one of the key challenges for the Nigerian Government and various Local Authorities (Kalili, Adongo, & Larson, 2008). According to the December 2015 First National Bank (FNB) Housing Index, the median house price for 2015 was N$800 000 (about US$5 6125), up from N$700 000 (US$49109.67) by a private developer in 2014. The annual median housing price for Nigeria has been increasing by a percentage of 14.29 percent per year. Hence the relative change from NS$640 000 (about US$44 900) in 2014 to NS$700 000 (about US$49 109) in 2015 (FNB, 2015).
Besides being influenced by poor land delivery, the price growth is also a result of increasing demand due to increase in the labour force. The potential introduction of new taxes, higher interest rates and higher inflation of basic goods which will impact consumers’ disposable income pose further downside risks to this sector (FNB Housing Index, 2015). Housing is a basic necessity to which we should all have access to ensure that Nigerian people are able to achieve a reasonable standard of living there must be adequate provision of and access to affordable and appropriate shelter. Factors militating against residential accommodation supply is one of the key challenges facing policy makers in Nigeria. By 2007, the country faced a backlog of 80,000 household’s entire need of housing. There are reasons to believe that this figure has increased since then as manifested in the growing number of informal settlements on the outskirts of most towns in the country (Mwilima, Filipus &Fleermuys, 2011). The National Housing Enterprise, a state-owned company mandated to provide housing solutions in order to alleviate the national housing need, faces a backlog which is estimated to be around 110 000 and growing at an annual rate of 3 700 units. The National Housing Enterprise waiting list has dramatically increased from 18 000 in 2013 to 76 800 in 2016 (Bank of Nigeria, 2015).
About 74 percent of Nigerian households cannot afford conventional housing as access to credit remains difficult. The “Getting Credit” section of the World Bank’s Doing Business 2016 report ranks Nigeria at 60 out of 189 countries. Low incomes and high costs for servicing of land have excluded many poor people from acquiring land and constructing their own houses. This is evident in that towards the end of 2015 the average price per square meter was N$472 (about US$33.30) for new property coming into the market.
The main factor contributing towards housing shortage is the inadequate housing supply which failed to keep up with growing demand over the years. The housing shortfall is further amplified by the prevailing high unemployment rates, rising house prices and the growing trend of urbanization in the country, amongst others (Mwilima, Fillipus & Fleermuys, 2011). The demand for housing has been rising at a fast pace, while supply has not been growing at the same rate. This situation has resulted in high house prices, raising the question whether these prolonged price increases will be sustainable and affordable over the long-run, the demand for housing has been rising at a fast pace, while supply has not been growing at the same rate (Mwilima, Fillipus & Fleermuys, 2011).
1.2 Statement of the problem
House prices increased by 29% year on year to bring the FNB House Price Index to 234.7 index points through June as house prices continue to increase in 2014 at a much faster pace than the long term trend over the past seven years. According to Kaira (2014) Nigeria ranks second in the world as the most expensive country in which to own a house. Makurdi in particular, has the second highest house price increase in the world after Dubai according to the Knight Frank Global House Index (Wallis, 2014). Due to its increasing population in Makurdi access to affordable housing is becoming increasingly difficult. There is currently a severe and immediate need for increase of resources to be able to supply affordable housing in Nigeria and these needs will continue to increase in the future. Affordable housing is a necessity in every area of Nigeria. Unfortunately, the need for this housing is not being met by majority of the Nigerians.
The factors militating against residential accommodation supply remains as one of the country’s fastest growing and most pervasive housing challenge. Thus study will be conducted in Makurdi with the general objective of assessing housing supply and its affordability with special reference to residential housing. Researcher will examine factors that have contributed to the shortage of affordable housing supply and why the majority of the Nigeria population are finding it difficult to purchase or own their own homes. The study will also investigate the challenges faced by the housing supply institutions that is preventing them from increasing the supply of affordable homes.
1.2 Main Objective
The main objective of the research is to assess the factors militating against residential accommodation supply in Nigeria focusing primarily on Makurdi. The study investigated the shortage of affordable housing in Makurdi and how this problem can be addressed to improve living standards for the low and middle income groups.
1.3 Research Questions
These objectives were addressed through answering the following research questions.
i. What factors have contributed towards the shortage of affordable housing in Makurdi?
ii. What are the key challenges associated with the supply of affordable housing in Makurdi?
iii. Is there synergy between policies governing the supply of housing and the government housing policies?
iv. What are the long term goals and strategies to overcome and improve housing affordability?
v. What challenges do low and middle income groups face to acquire affordable housing?
1.6 Significance of the study
This study provides information to the town's administrators that will facilitate the formulation of operational plans and strategies based on the existing realities in order to facilitate supplying of affordable housing to meet the needs of the majority low and middle income Nigerian people. The study will create awareness among housing supply agents especially for local governments and public housing agencies about socio-economic impact of the affordable housing for the affected groups. Research aims to stimulate an academic inquiry that will lead other researchers to expand the knowledge and insight into Housing affordability issues using the findings that will be presented herein, complemented by other existing body of knowledge as the basis.
1.7 Limitation of the study
The study is limited to Makurdi, leaving the other parts of Nigeria where there might be a similar or related scenarios. The size of the sample in this study will be inadequate for generalisation to population. Other limitations may include timing constraints whereby the research was expected to complete within a specific timeframe. Not all individuals agreed to be interviewed and others refused to disclose certain information.
1.8. Conclusion
The Chapter highlighted the different topics that will be addressed while investigating the factors that affect the factors militating against residential accommodation supply In Makurdi. The essence of investigating these factors is to aid the government and financial institutions in form of policy recommendations, to introduce various tools that would be investment friendly and encourage the banks to lend towards property acquisition at affordable and reasonable rates. The objectives of the study and research questions developed in this chapter, is to be used to aid research and draw logical conclusions. These conclusions will contribute to the process of developing better housing affordability measures that will more readily reflect the housing realities and needs of households of the low and middle income groups in Makurdi.
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