Determinants of Housing Demand

Aderamo and Ayobolu (2010) stated that urbanization has been a common feature of cities of developing world since the last century. This according to them has been in form of rapid population growth and physical expansion of cities. That the sheer migration of able – bodied young men and women from rural areas to cities have had profound impact on the city. However, the increase in the rate of urbanization and growth in the number of cities are both alarming and scaring thereby resulting to inadequate provision of basic facilities and services which housing is one of them.

 

Albeti et al (2001) asserted that urbanization being twentieth century demographic phenomena, more and more people are changing residence from rural to urban areas. They argued that increasing proportion of the population prefer large cities, big towns and a nearby administrative capitals. They stated that growth of an urban centre can take place in different forms: by growth of the existing urban localities, by classification of cities (from rural to urban) and annexations of new territory to existing cities. They opined that other main factor which determines the growth of an urban centre is the demographic change. He stressed that, this demographic change results to high housing demand.

 

Aluko (2010) quoted that, the result of the uncontrolled population growth in the urban areas are characterized by inadequate housing, the growth of slums, traffic congestion, poor waste disposal, shortage of water and inadequate power supply. In addition, the cities face problems of fragmented administration, insufficient coordination in planning and in allocation. Jiboye (2011) noted that the global urban population has quadrupled since 1950’s, and cities of the developing world now account for 90% of the world’s urban growth. The population estimate indicates that at a certain point in 2007, the world’s urban population would equal the world’s rural population for the first time in history. The growth in urban population will continue to rise, projected to reach almost 5 billion in 2030. Much of this urbanization is predicted to take place in the developing world, with Asia and Africa having the largest urban populations. Current reports also indicate that more than half of the world’s population now lives in urban areas, and by the year 2050, 70% will be city dwellers, with cities in Asia and Africa registering the biggest growth. Consequently, urban population is anticipated to grow on an average of 2.3% per year in the developing world between 2000 and 2030. He stated that the rapid urbanization and poor economic growth have compounded the problem of inadequate housing in Nigeria and that the reality of this situation is that existing housing stocks are inadequate to cater for the increasing population.

 

(Moser and Satterthwaite, 1985) stated that the rapid growth in cities has been accompanied by a rapid growth of urban inhabitants who live in sub – standard and overcrowded conditions. According to them, the figures from developing countries show that town dwellers represent an average of 30 – 60 % of the urban population. At present, it is estimated that over 50% of the urban population live in extreme poverty, with this figure rising to high as 79% in some cities. Half of the current urban population is of low – income and over a billion urban dwellers have been counted among the urban poor. He explored that majority of low income groups reside in slum areas due to poverty and partly as a result of low education achievement that cannot enable them to obtain high income jobs. Abiodun (1992) affirmed that since the end of the World War II urbanization in developing countries has accelerated greatly, with an increasing proportion of the urban population in each country concentrating in the large urban agglomerations. According to him, Nigeria has been no exception, since the turn of the twentieth century example of Lagos as having grown phenomenally, both demographically and in spatial terms. Pre – colonial Lagos originated as the only natural break for about 2,500 km along the West African coast, it became an important slave – exporting port in the eighteenth century. With a population of about 25,000 in 1866, Lagos was one of the smaller settlements in Nigeria, to compare with the largest being Sokoto with a population of 120,000. According to him, the population of Lagos increased due to earlier refuges from slavery and war in the interior, freed slaves from Brazil, and later the arrival of colonial administrators and traders that settled in the port. Therefore it increased by 40,000 in 1901 and 74,000 in 1911. In 1963 it had reached 665,000, covering 69.9km2.The provisional results of the 1991 census, gave Lagos metropolis a population of 5.3 million or 93% of the total population of Lagos State. He said that one of the problems facing Lagos is housing that the considerable gap between supply and demand has found expression in the astronomical cost of rented dwellings. Overcrowding, slums, and substandard housing are expression of this problem.

 

Ademiluyi (2010) observed that despite many interventions and efforts by the governments, actual achievement in terms of providing adequate housing in the country remain essentially minimal for a number of reasons; which include:

(a)    Problem of plan implementation. There is often a wide gap between what is on paper and what is happening on the ground. For example, only 13.3% achievement was recorded in the Federal Government housing programme in the third National Development Plan.

(b)   Lack of adequate data relating to the magnitude of the problem, due to partly the absence of the national data bank on housing.

(c)    Inconsistency in government policies and programmes, including frequent changes of policies with changes of government and without proper assessment of the existing ones.

(d)   Lack of efficient and sustainable credit delivery to the housing sector.

(e)    People’s incomes are relatively low in comparison with house market prices, resulting in an affordability problem.

(f)    High cost of building materials.

(g)   The rapid annual growth rate of the Nigerian population, which was estimated at 3.3% on the basis of annual birth rate of 49.3 per 1,000. Coupled with the rapid population growth/urbanization is the problem of an increasing poverty level among the citizenry, which has risen from 65% in 1996 to about 70% in 2007, according to UNDP and World Bank estimates.

(h)   Lack of effective coordination among Housing Agencies. While all tiers of the government are involved in one way or the other in housing matters, but their activities are hardly coordinated.

(i)     Politicization of housing issues.

 

Igwe-kalu and Chima (2006) they observed that housing demand have advanced from mere place of rest and shelter to a place of comfort, leisure, a commodity, an investment a symbol of wealth, they identified the factors that influence housing demand as follows: - (a) the quantity of housing available (b) the quality of the houses available. (c) the distribution of the available housing stock. (d) Inadequate infrastructure (e) inadequate maintenance (f) affordability (g) sanitary condition (h) inadequate maintenance (i) Hazards.

 

      Variation of Housing Demand among Income Groups

According to him the existing housing shortage, which is the main problem of the city, is created as a result of rapid population growth rate and insufficient housing supply to satisfy the newly formed households. The continuously growing backlog housing need leaves about 25% of the city’s population to live in overcrowded dwellings. In 2004 about 65.7% of the residents were affected by housing deficit as a result of insufficient housing in quantity and quality terms. Housing crisis of the city highly affects the low-income group which accounts more than 90 % of the city’s population.

 

Jiang (2006) defined housing condition according to the nature of housing availability, affordability and qualitative aspects of the neighbourhood environment. According to him, choice of the housing quality indicators is often context-dependent and varies over time. Moreover, he also affirmed that the use of the housing indicators is often affected by data availability. For example, to measure the prevalence of slums in developing countries, according to him the UN-HABITAT (2003) adopted five indicators in its statistical report, which include access to improved water, improved sanitation, sufficient living space, improved durable housing and secure tenure.

Concept of Housing and Housing Demand

Concept of Housing and Housing Demand

Introduction

Housing is one of the three basic needs of man. It is the most important factor for physical survival of man after provision of food. A deficiency in housing can profoundly affect the health, welfare and productivity of man. It is an indispensable necessity without which man’s survival is impossible. Beyond the fabric, services and the contents of the dwelling, housing encompasses all that surround the dwelling to stimulate healthy living. Housing has to be quantitatively and qualitatively adequate in order to fulfill its basic purposes (Aderamo and Ayobolu, 2010).

 

Housing as a key determinant of quality of life, can be measured at individual, household and community levels as well as human rights in the cycle of human life (Magigi and Majani 2006). It is unique among consumer goods in its pervasive economic, social, and psychological significance. The physical and social environments, within the house and the neighbourhood, support family functioning and children's personal growth. Adequate and decent housing provision has been the central focus of developing countries’ government.

 

Housing demand has witnessed unprecedented increase in the past decades. The low level of economic development, physical, social and cultural factors have created, among others, immense obstacles to the provision of adequate housing to the majority of population. The population growth rates are growing faster than the provision of new housing and housing infrastructure. This has resulted in intensive usage of the existing stock of housing and deterioration of housing environments. Some of the manifestations of housing and residential land use intensification are increasing room occupancy levels, housing adjustments involving physical changes in housing space and housing space conversion (Awanyo, 1992).

 

Housing in all ramifications is more than a shelter since it embraces all the social services and utilities that make a community or neighbourhood a livable environment. The result is manifested in growing overcrowding in homes, neighbourhoods and communities as well as increasing pressure on infrastructural facilities and rapidly deteriorating environment (National Housing Policy, 2006).

The housing demand in Nigeria can be examined from urban and rural perspectives. In the urban centres the situation is characterized by acute shortage exacerbated by the rapid rate of urbanization with its associated high population growth rate. This problem of housing shortage is also highly associated with overcrowding and insanitary conditions. The situation in rural areas is characterized by poor quality housing with inadequate utilities like potable water, electric power supply, all season roads etc. In addition to the urban and rural perspectives of the Nigerian housing situation is that of poverty. About 70% of the Nigerian population are poor or are of low – income groups (Federal Office of Statistics, 1996) 

 

         Housing Demand

Housing means many things too many people and the understanding of the concept depends on individual perspective. Housings defend not only as a shelter (four walls and roof) but together with its supporting infrastructure such as water supply, electricity, roads (transportation facilities ) shopping facilities and good enabling environment.

 

Iyangba (1997) see housing as the residential environment roar neighborhood and the physical structure that mankind uses for shelter including all services, facilities and equipment needed for physical health and social well-being of the family. From this definition, housing can then be explained as more than a mere shelter, as it comprises of all the social services and utilities that makes a community a livable environment.

Bounne (1981) gives an illustration of early cave. Man had shelter in a cave from the harsh effect of the weather, wild animal etc. but having his own house to include exterior environment where he can hang his skin to dry became necessary. To this end, it can be deduce that housing and services environment that provides comfort, dignity and health for individual and family living.

 

Quigley (1976) extended the theoretical analysis of the demand for housing to incorporate the spatial dimension (and thus the residential location decision), as well as the choice of housing type. In particular, we address the choice of housing type and residential location in a metropolitan area, which may have several work places. In this short-run analysis, the spatial distributions of the stocks of various types of housing are given. The theoretical model indicates how choices among housing are related to systematic variations in the relative prices faced by households for the same types of residential housing. The model indicates that these prices, in turn are heavily dependent on the interaction of work place location, the spatial distribution of the stock of housing, and the characteristics of the urban transport network. In housing, demand is seen as the housing need of the people backed up with purchasing power or the ability and wiliness to pay that could be expressed in term of purchasing power, function of income family size location tradition etc. Housing demand is different from need, it is only when the need is backed up with the price or rent that is it said to be effective demand. According to Robinson (1997), “there are three main components of housing demand in Nigeria which are; demand from new housing holds, demand from movers between tenure group and demand from existing household within a particular tenure group. This is because the majority of households who could not build or purchase their own homes after resort to renting.”

Demand for housing differs from place and across socio-economic groups, for instance, demand in the city differs from that of the rural areas. Demand also differs among the high, medium and low-income groups. Housing demand also charges with time, social and economic situation. There is a gap in knowledge between requirement for housing and the ability to obtain the preferred housing type, which result in an effective request crisis for affordable housing in the country. Although it is clear there is a housing shortfall, it is fundamental to know that people can only obtain what they can meet the expense. Affordable housing to low- and middle-income households is the affordability gap. This is defined as the difference between the required monthly mortgage repayments on the least expensive house and the 33% (an industry standard as recommended by the international labour organization) that can be deducted from the total salary of a potential homeowner. The gap affects 52% of the population or 65 million households. While some households achieve affordability with supplementary, informal income, this is not counted in loan origination procedures.

 

Arunsi (2006) identified the four effective factors that determine housing demand to include household formation, acquisition of second homes, vacancies, and other factors associated with the supply of housing. He declared that in estimating housing demand, certain basic information is required such as population characteristics (total population distribution) of the settlement by type and household size. The population will give the quantitative inventory of the existing housing stock in terms of total number of dwellings, distribution of dwellings by room size, number and provision of utilities like water, electricity, toilet etc.However, the demand for housing may not necessarily be the same as the need for it. Every family needs a dwelling whether it can afford it or not. The effective demand on the other hand, depends among other factors upon the ability to pay economic price or rent. In Nigeria, the provision and construction of houses is very much an individual’s concern, thus most of the houses are privately built and owned. An examination of the country’s response to housing needs and demand are pertinent at this time when every person’s demands in housing provision are too many and varied (Abiodun,1974).

 

Femi and Khan (2014) explained housing demand as the willingness and ability of housing consumer to pay for a particular dwelling depending upon such consumer’s incomes, house type, location preferences and local prices. He indicated that demand is the quantity of good or service that consumers are willing and able to buy at a given price at a particular given time period. Demand for housing at certain price refers to the value that is placed on a house linked with the satisfaction derived in such house. In economics, this is termed as utility. Housing need relates to social housing while housing demand is related to private housing, effective housing demand is different from Desire housing demand. Effective housing demand can be explained as a desire to buy a house that is backed up with an ability to pay for it. On the other hand, Desire housing demand can be termed to be willingness to buy the house with the consumer’s lack of the purchasing power to be able to buy the house. Until there is purchasing power in terms of money to buy the housing unit, such housing demand has not become effective housing demand (Alison, 2004).

 

          Trends of Housing Demand

Urban populations have increased as a result of both urbanization and natural population growth. One fifth of urban residents are relatively newcomers to urban areas (i.e. first generation residents) and urban areas are expected to continue to grow at a rate of 2.7% per annum. It is noted that there is high housing demand in the country as result of this increase in population. Owusu (2008) revealed that the sharp increase in the level of urbanization is characterized by limited infrastructure (including housing).According to him, the existing housing condition in Nigeria is as a result of rapid urban growth fuelled by increased population growth (both natural and rural-urban migration) and exacerbated by economic liberalization and globalization. Increasingly, the effects of liberalization and globalization are re-configuring the housing supply and demand dynamics resulting in increasing land and property values and rent, which is pushing some middle-income Nigerian to slums and other poor neighbourhoods.

 

Struyk and Roy (2006) revealed that the population of Kyrgyzstan has increased by 500,000 people since 1998 to 5.22 million inhabitants, despite a strong outward migration in the same period. Due to migration from rural to urban areas, the biggest part of this increase concerns the capital city, Bishkek and to a much smaller extent, the city of Osh. In many parts of the country there seems to be no housing demand. This situation contrasts to that of housing production. The housing stock grew in the same period of time only half as fast as the population, from 1.05 to 1.10 million units, i.e., below 5%. He estimates that 166,000 families are in need of new housing in 2007; whereas the estimate levels of new housing construction was 20,000 to 30,000 dwelling units a year. He argued that under these conditions, it would take 15 years to recover to the same level performance of housing provision as was being achieved before independence.

 

Scott (2004) stated how the nature of demand for government-assisted housing in South Africa has changed significantly over the last five years: According to him, an average population growth of 2.1% per annum has resulted in the population increasing by 10.4% or over 4.2 million people between 1996 and 2001. If this growth has been sustained since 2001, the extrapolated population for 2004 is 47.5 million people; In addition, the country has experienced a 30% increase in the absolute number of households, where only a 10% increase was expected. This has been caused by the drop in average household size from 4.5 people per household in 1996 to 3.8 in 2001. Urban populations have increased as a result of both urbanization and natural population growth. One fifth of urban residents are relatively newcomers to urban areas (i.e. first generation residents) and urban areas are expected to continue to grow at a rate of 2.7% per annum. He stated that there is high housing demand in the country as result of this increase in population.

 

Tufour (2008) revealed that the rapid population growth and an uncontrollable rate of urbanization have made housing one of the critical issues facing the Government of Ghana. Various data suggest that housing deficit is in excess of 900,000 units whilst supply figures vary between 25,000 and 40,000 units per annum as against annual requirement of 100,000 units. Currently, the annual housing supply to demand ratio (for new housing) is estimated at about 35%. Ghana is experiencing significant demographic change; which has implications for its cities and towns. The rate of urbanization in Accra is 15%; urban population was 31% in 1980 and rose to 44% in 2000. By the year 2010 more than half (51.5%) of the population is expected to be living in urban areas. As Ghana’s economy continues to grow, transition from a predominantly rural to a predominantly urban society is taking place. The rate at which urban population is growing since 1970 ranks higher than that of national growth. In 1993 alone the urban population in Ghana had shoot up to 35 percent and is expected to double by 2010 earlier than the globally predicted time of 2030 (World Bank, 2002 on quote). With the population estimated at 2.2 million, Accra, Ghana’s capital shares 25 percent of urban population. He indicated that the rapid population growth and uncontrollable rate of urbanization have made housing one of the critical issues facing the government of Ghana. That various data put it that housing deficit is in excess of 900,000 units, while supply figures vary between 25,000 and 40,000 units per year as against annual requirement of 100,000 units.

Ademiluyi (2010) opined that, the ever mounting of crises in the housing sector of the developing world has various dimensions. These include absolute housing shortages, emergence and proliferation of the slums/squatter settlements, the rising cost of housing rent, and the growing inability of the average citizen to own their houses or procure decent accommodation of their taste in the housing market. He revealed that in Nigeria, even though there are no accurate data on the nation’s housing stock, earlier studies and observations strongly suggest quantitative and qualitative housing problems across the country. He observed that policymakers in Nigeria are not really aware of the magnitude of the housing problems facing the low-income earners in the country.According to him, the increasing high rent is a pointer to the fact that there is a decrease in housing stock.

He estimated that the nation’s housing needs for 1990 to be 8,413,980; 7,770,005 and 7,624,230 units for the high, medium and low income groups respectively. The same study estimates for the 2020 stands at 39,989,286; 35,570,900 and 28,548,633 housing units for high, medium and low income groups respectively.

 

Again, the National Rolling Plan from 1990 – 1992 estimated the housing deficit to increase between 4.8 million to 5.9 million by the year 2000. The 1991 National Housing Policy estimated that 700,000 housing units needed to be built each year if the housing deficit was to be cancelled. The document, in fact, indicated that no fewer than 60% of new housing units were to be built in the urban centres. This figure had increased at the time the 1991 housing policy was being reviewed in 2002. In 2006, the Minister of Housing and Urban Development declared that the country needed about 10 million housing units before all Nigerians could be sheltered.

AN EXAMINATION OF THE EFFECT OF HOUSING DEMAND ON RENTAL VALUE OF RESIDENTIAL PROPERTIES

AN EXAMINATION OF THE EFFECT OF HOUSING DEMAND ON RENTAL VALUE OF RESIDENTIAL PROPERTIES

CHAPTER ONE

1.0       INTRODUCTION

1.1       Background of the Study

Housing is one of the three basic needs of man. It is the most important factor for physical survival of man after provision of food. A deficiency in housing can profoundly affect the health, welfare and productivity of man. It is an indispensable necessity without which man’s survival is impossible. Beyond the fabric, services and the contents of the dwelling, housing encompasses all that surround the dwelling to stimulate healthy living. Housing has to be quantitatively and qualitatively adequate in order to fulfill its basic purposes (Aderamo and Ayobolu, 2010).

Housing as a key determinant of quality of life, can be measured at individual, household and community levels as well as human rights in the cycle of human life (Magigi and Majani 2006). It is unique among consumer goods in its pervasive economic, social, and psychological significance. The physical and social environments, within the house and the neighbourhood, support family functioning and children’s personal growth. Adequate and decent housing provision has been the central focus of developing countries’ government.

Housing demand has witnessed unprecedented increase in the past decades. The low level of economic development, physical, social and cultural factors have created, among others, immense obstacles to the provision of adequate housing to the majority of population. The population growth rates are growing faster than the provision of new housing and housing infrastructure. This has resulted in intensive usage of the existing stock of housing and deterioration of housing environments. Some of the manifestations of housing and residential land use intensification are increasing room occupancy levels, housing adjustments involving physical changes in housing space and housing space conversion (Awanyo, 1992).

Housing in all ramifications is more than a shelter since it embraces all the social services and utilities that make a community or neighbourhood a livable environment. The result is manifested in growing overcrowding in homes, neighbourhoods and communities as well as increasing pressure on infrastructural facilities and rapidly deteriorating environment (National Housing Policy, 2006).

The housing demand in Nigeria can be examined from urban and rural perspectives. In the urban centres the situation is characterized by acute shortage exacerbated by the rapid rate of urbanization with its associated high population growth rate. This problem of housing shortage is also highly associated with overcrowding and insanitary conditions. The situation in rural areas is characterized by poor quality housing with inadequate utilities like potable water, electric power supply, all season roads etc. In addition to the urban and rural perspectives of the Nigerian housing situation is that of poverty. About 70% of the Nigerian population are poor or are of low – income groups (Federal Office of Statistics, 1996). This reflects the inability of most of the population to afford good and decent housing especially in the inflation prone economy. (Igwe- Kalu and Chima, 2006).

1.2       Statement of the Problem

The deficits in housing demand have resulted in numerous problems. The problems include overcrowding, reduction in the vacancy rate, high room occupancy rates, proliferation of informal settlements, pressure on the existing housing stock, pressure on existing infrastructure, deterioration of the infrastructural facilities, inadequate basic amenities, poor spatial arrangement, and deteriorated environment. Others are high rents, increase in housing prices, lack of adequate and affordable housing and decrease in Marginal propensity to save (MPS) of the household as greater part of the income is spent on rent. It is against this background that this study examines the effect of housing demand on rental value of residential properties.

1.3       Aim and Objectives of the Study

The aim of this project is to examine the effect of housing demand on rental value of residential properties.

The specific objectives of this study include the following,

1. To examine housing demand in Kaduna metropolis
2. To identify factors that influence housing demand in the study area.
3. To evaluate the effects of housing demand on rental value of residential properties in the study area.

1.3       Research Questions

1. What is the trend of housing demand in Kaduna metropolis?
2. What are the factors influencing housing demand in the study area?
3. What are the effects of housing demand on rental value of residential properties in the study area?

1.5       Significance of the Study

The condition of human existence is directly related to the environment. This environment comprises mainly the dwelling housing. However, improving housing demand and determining its effects on rental value of residential properties become a priority for every nation where there is poor condition of housing provision and demand.

This study addresses the effects of housing demand on rental value of residential properties. It identified factors that influence housing demand, which is crucial to the formulation of appropriate housing policies and programmes. The study provides empirical evidence on the nature and extent of factors that determine housing demand. The information is crucial to the policy makers because they form basis for formulation of policies and programmes towards addressing the problem of housing shortages.

This will help them to identify and tackle the challenges facing the provision of adequate housing for all Nigerians. It gives insight to private developers on the nature of housing demand as well as the housing stock to be provided in order to meet the demand. Finally, this study will be a reference point to future researchers in the field of housing and community development.

1.6       Scope of the study

This study examines the effects of housing demand on rental value of residential properties. This is limited to examining the trend of housing demand, identify the factors that influence housing demand, determine whether there is a variation in housing demand among various group of residents and evaluate the effects of housing demand on rental value of residential properties. Geographically this study is limited to Mando, Kaduna.

1.7       Definition of Terms

Housing: Housing refers to houses or buildings collectively; accommodation of people; planning or provision of accommodation by an authority; and related meanings. The social issue is of ensuring that members of society have a home in which to live, whether this is a house, or some other kind of dwelling, lodging, or shelter (Aribigbola, 2008)

Affordable housing: Affordable is a relative term, the common definition is when the cost of shelter does not exceed 30 percent of gross household income.

Housing Demand: It is defined, as the amount and quantity of housing people are willing and able to pay for at a particular time.

Housing needs: It is the number of housing units required to accommodate a population at a given standard of housing occupancy.

Housing Stock: It is regarded as the total number of existing habitable housing units in a given place.

Housing Unit: It is defined as a unit of accommodation occupied by a household, be it one person or more.

Vacancy rates: It is most useful for measuring the existing match between households and housing units. That is the percentage of total available housing unit not occupied.

1.8       The Study Area

Kaduna is the state capital of Kaduna State in north-western Nigeria, on the Kaduna River. It is a trade centre and a major transportation hub for the surrounding agricultural areas, with its rail and road junction. The population of Kaduna was at 760,084 as of the 2006 Nigerian census.

Until the late eighties when Kaduna State seemed to have slid into intermittent sectarian and ethnic violence, its capital city, Kaduna, was one of the most peaceful, cosmopolitan and politically important cities in Nigeria. These crises have, however, merely diminished rather than eliminated the city’s virtues, thanks largely to the effective measures the authorities in the state adopted from 2000, the year of the worst crisis, to curb the hostilities in the state.

Established in 1912 by Lord Frederick Lugard, first as a garrison town and then as the regional capital of the then Northern Protectorate, Kaduna soon attracted people of all races, religions and cultures. Within two decades of its establishment, it grew from an almost virgin territory of small scattered settlements of the indigenous population, mostly the Gbagyi, to a town of over 30,000 people. This population comprised the British colonizers, artisans from other West African British colonies, artisans and clerks from the Southern Protectorate as well as labourers and traders from the Hausa, Nupe, Kanuri, Fulani and other tribes in the Northern Protectorate.

By 1963 the town had about 250,000 residents and nearly 30 years later, the 1991 census put its population at 1,307,311, a little over a third of the population of the entire state.

Kaduna’s history reflects that of the North in particular and Nigeria in general. This history dates back before 1912, the year Lord Lugard chose it to become the dual capital of the North and Nigeria. The road to Kaduna actually started in 1900 when Lord Lugard was first appointed the High Commissioner of the Northern Protectorate. At that time Lokoja, at the confluence of the mighty rivers Niger and Benue, was the centre of British missionary activities and British trade. It was also the headquarters for its wars of occupation of the North.

Lugard first settled in Lokoja as regional capital to continue with the colonial conquest of the region. Two years later, i.e in 1902, he moved the capital from Lokoja further upstream of River Niger, to Jebba. However, Jebba remained the headquarters for only a few months. Towards the end of the year, he moved even further upstream to Zungeru with the intention of making it the permanent capital of the North. Many Nigerians will remember Zungeru, a major railway town, as the birth place of Nigeria’s foremost nationalist and first president, Dr. NnamdiAzikiwe. His father had worked there as a railway staff.

For a while it seemed as if Zungeru had succeeded where Lokoja and Jebba had failed; it remained the regional capital for 10 years. However, with time, Lord Lugard himself began to doubt the wisdom of his choice especially given the vastness of the North which had been “pacified” by 1906. He then began a search for a more central and more accessible location than Zungeru.

His search finally ended at a location on the Zaria plains, roughly in the middle of the region. Not only was Kaduna centrally located and much more accessible than Zungeru, the Zaria plains in which it was located were well served by two major tributaries of River Niger, River Kaduna, which gave the settlement its name, and River Gurara. River Kaduna itself was so called because it was crocodile infested, kadduna being the plural of ‘crocodile’ in Hausa.

Apart from its centrality, accessibility and abundant water supply, the location also possessed a clement environment. Also, following the not-too-happy relationship of the colonialists with the large indigenous population of Lagos as capital of the Lagos Colony and Calabar as capital of the Southern Protectorate, the British considered the virginity of a location an important consideration in their choice of a capital. Kaduna, with its sparse and scattered settlement of the indigenous population, satisfied this criterion.

No sooner had Lord Lugard settled down in Kaduna as regional capital in 1912, than he began to plan for it as Nigeria’s capital, ahead of the amalgamation of the Northern and Southern Protectorates in 1914. This followed his promotion that same year as Governor-General of the amalgamated Nigeria. As Governor-General, he did not hide his antipathy towards Lagos and recommended that the capital be moved to Kaduna as quickly as possible. “Government House, Lagos,” he wrote in one of his papers, “would make an excellent hotel if the transfer to Kaduna was achieved.”

The transfer was never achieved. First, the Colonial Office in London thought Kaduna was too far inland for quick and effective communication between motherland and colony. Second, in 1919, Lord Lugard was succeeded as Governor-General by Lord Clifford, who did not share Lugard’s loathing for Lagos. In any case, such a transfer was considered too expensive an exercise by the British.

And so it was that Lugard could not fulfill his wish to see Kaduna become the capital of both the North and Nigeria. However, as the capital of the biggest region in the country – at 730,885 square meters the North was more than three times the size of the Western and Eastern Regions combined. It was also the most populous – Kaduna City was to assume an unmatched political importance in the country, not least because it became the headquarters of the Northern Peoples’ Congress. The NPC eventually became the ruling political party in the North and the senior partner in a coalition government at the centre up to the first military coup in January 1966.

The political status of Kaduna before independence rose a notch higher when a group of Western-educated Northerners led by the late Dr. R.A.B. (Russel Aliyu Barau) Dikko, the region’s first medical doctor, founded the Jam’iyyan Mutanen Arewa AYau (Association of Northerners Today), in 1948 in the city, ostensibly as a cultural association. The JMA transformed into a political party in October 1951 and subsequently chose Sir Ahmadu Bello to lead it. It held its first convention in Kaduna in July 1952.

The most important symbol of the city’s political importance was and remains the Lugard Hall Complex, named after Lord Lugard. Located at the heart of Kaduna and painted in the national colours of green and white, the complex with its prominent dome sits on a large expanse of land that forms a huge roundabout bound almost right round by Coronation Crescent and by the northern end of the broad Independence Way on its southern entrance. It served as the regional House of Assembly and House of Chiefs during the First Republic. Today it serves as Kaduna State’s House of Assembly.

In addition to being the political capital of the North, Kaduna soon developed into a pre-eminent center of media ( Broadcasting Company of Northern Nigeria, New Nigerian and the defunct Today, Hotline, Democrat, Citizen and Reporter) and of commerce and industry in the region and in Nigeria. These developments started in 1957 as the city became the most important hub of the country’s railway network connecting Lagos to Kano, Port Harcourt to Maiduguri and Baro, the country’s then biggest and busy inland port on River Niger.

The Arewa House lies on twenty acres of beautifully wooded land with equally beautiful landscape in the quiet neighbourhood of the former Ministers’ Quarters. It is located on No. 1 Rabah Road, on the grounds of the official residence of Sir Ahmadu Bello, the regional premier who was assassinated in the first military coup in the country.

Apart from the Arewa House, Kaduna has a large concentration of educational institutions including the Kaduna Polytechnic, possibly the largest in Africa, and the Nigerian Defence Academy, which doubles as a military training institution for officers of the Nigerian military and a degree awarding institution.

EFFECT OF HOUSING DEMAND ON RENTAL VALUE OF RESIDENT PROPERTIES IN MANDO KADUNA

EFFECT OF HOUSING DEMAND ON RENTAL VALUE OF RESIDENT PROPERTIES IN MANDO KADUNA

ABSTRACT

The project examine the effect of housing demand on rental value of residential properties. It seek to examine housing demand in Kaduna metropolis, identify factors that influence housing demand and to evaluate the effects of housing demand on rental value of residential properties in the study area. The research adopts the use of questionnaire, personal observation and interviews to gather information/data for the purpose of the research and descriptive statistical tool was used to analyse the data gathered to ascertain the effect of housing demand on rental value of residential properties. The findings of the study shows there is an increasing demand for various types of residential property such as tenement buildings, block of flats and self-contained due to the ever increasing population and limited supply of the housing stock. Finally the study recommends that in order to be able to meet the demand for urban housing in Nigeria, there is demand to embark on housing policy with appropriate strategic planning and management, the government should make available fund for civil servants and private individuals to enable them develop their own properties thus reducing the crunching effects of housing shortage.

Contents of the project

CHAPTER ONE

1.0       INTRODUCTION

1.1       Background of the Study

Housing is one of the three basic needs of man. It is the most important factor for physical survival of man after provision of food. A deficiency in housing can profoundly affect the health, welfare and productivity of man. It is an indispensable necessity without which man’s survival is impossible. Beyond the fabric, services and the contents of the dwelling, housing encompasses all that surround the dwelling to stimulate healthy living. Housing has to be quantitatively and qualitatively adequate in order to fulfill its basic purposes (Aderamo and Ayobolu, 2010).

Housing as a key determinant of quality of life, can be measured at individual, household and community levels as well as human rights in the cycle of human life (Magigi and Majani 2006). It is unique among consumer goods in its pervasive economic, social, and psychological significance. The physical and social environments, within the house and the neighbourhood, support family functioning and children’s personal growth. Adequate and decent housing provision has been the central focus of developing countries’ government.

Housing demand has witnessed unprecedented increase in the past decades. The low level of economic development, physical, social and cultural factors have created, among others, immense obstacles to the provision of adequate housing to the majority of population. The population growth rates are growing faster than the provision of new housing and housing infrastructure. This has resulted in intensive usage of the existing stock of housing and deterioration of housing environments. Some of the manifestations of housing and residential land use intensification are increasing room occupancy levels, housing adjustments involving physical changes in housing space and housing space conversion (Awanyo, 1992).

Housing in all ramifications is more than a shelter since it embraces all the social services and utilities that make a community or neighbourhood a livable environment. The result is manifested in growing overcrowding in homes, neighbourhoods and communities as well as increasing pressure on infrastructural facilities and rapidly deteriorating environment (National Housing Policy, 2006).

The housing demand in Nigeria can be examined from urban and rural perspectives. In the urban centres the situation is characterized by acute shortage exacerbated by the rapid rate of urbanization with its associated high population growth rate. This problem of housing shortage is also highly associated with overcrowding and insanitary conditions. The situation in rural areas is characterized by poor quality housing with inadequate utilities like potable water, electric power supply, all season roads etc. In addition to the urban and rural perspectives of the Nigerian housing situation is that of poverty. About 70% of the Nigerian population are poor or are of low – income groups (Federal Office of Statistics, 1996). This reflects the inability of most of the population to afford good and decent housing especially in the inflation prone economy. (Igwe- Kalu and Chima, 2006).

1.2       Statement of the Problem

The deficits in housing demand have resulted in numerous problems. The problems include overcrowding, reduction in the vacancy rate, high room occupancy rates, proliferation of informal settlements, pressure on the existing housing stock, pressure on existing infrastructure, deterioration of the infrastructural facilities, inadequate basic amenities, poor spatial arrangement, and deteriorated environment. Others are high rents, increase in housing prices, lack of adequate and affordable housing and decrease in Marginal propensity to save (MPS) of the household as greater part of the income is spent on rent. It is against this background that this study examines the effect of housing demand on rental value of residential properties.

1.3       Aim and Objectives of the Study

The aim of this project is to examine the effect of housing demand on rental value of residential properties.

The specific objectives of this study include the following,

1. To examine housing demand in Kaduna Mando Kaduna
2. To identify factors that influence housing demand in the study area.
3. To evaluate the effects of housing demand on rental value of residential properties in the study area.

1.3       Research Questions

1. What is the trend of housing demand in Mando Kaduna?
2. What are the factors influencing housing demand in the study area?
3. What are the effects of housing demand on rental value of residential properties in the study area?

1.5       Significance of the Study

The condition of human existence is directly related to the environment. This environment comprises mainly the dwelling housing. However, improving housing demand and determining its effects on rental value of residential properties become a priority for every nation where there is poor condition of housing provision and demand.

This study addresses the effects of housing demand on rental value of residential properties. It identified factors that influence housing demand, which is crucial to the formulation of appropriate housing policies and programmes. The study provides empirical evidence on the nature and extent of factors that determine housing demand. The information is crucial to the policy makers because they form basis for formulation of policies and programmes towards addressing the problem of housing shortages.

This will help them to identify and tackle the challenges facing the provision of adequate housing for all Nigerians. It gives insight to private developers on the nature of housing demand as well as the housing stock to be provided in order to meet the demand. Finally, this study will be a reference point to future researchers in the field of housing and community development.

1.6       Scope of the study

This study examines the effects of housing demand on rental value of residential properties. This is limited to examining the trend of housing demand, identify the factors that influence housing demand, determine whether there is a variation in housing demand among various group of residents and evaluate the effects of housing demand on rental value of residential properties. Geographically this study is limited to Mando, Kaduna.

1.7       Definition of Terms

Housing: Housing refers to houses or buildings collectively; accommodation of people; planning or provision of accommodation by an authority; and related meanings. The social issue is of ensuring that members of society have a home in which to live, whether this is a house, or some other kind of dwelling, lodging, or shelter (Aribigbola, 2008)

Affordable housing: Affordable is a relative term, the common definition is when the cost of shelter does not exceed 30 percent of gross household income.

Housing Demand: It is defined, as the amount and quantity of housing people are willing and able to pay for at a particular time.

Housing needs: It is the number of housing units required to accommodate a population at a given standard of housing occupancy.

Housing Stock: It is regarded as the total number of existing habitable housing units in a given place.

Housing Unit: It is defined as a unit of accommodation occupied by a household, be it one person or more.

Vacancy rates: It is most useful for measuring the existing match between households and housing units. That is the percentage of total available housing unit not occupied.

1.8       The Study Area

Kaduna is the state capital of Kaduna State in north-western Nigeria, on the Kaduna River. It is a trade centre and a major transportation hub for the surrounding agricultural areas, with its rail and road junction. The population of Kaduna was at 760,084 as of the 2006 Nigerian census.

Until the late eighties when Kaduna State seemed to have slid into intermittent sectarian and ethnic violence, its capital city, Kaduna, was one of the most peaceful, cosmopolitan and politically important cities in Nigeria. These crises have, however, merely diminished rather than eliminated the city’s virtues, thanks largely to the effective measures the authorities in the state adopted from 2000, the year of the worst crisis, to curb the hostilities in the state.

Established in 1912 by Lord Frederick Lugard, first as a garrison town and then as the regional capital of the then Northern Protectorate, Kaduna soon attracted people of all races, religions and cultures. Within two decades of its establishment, it grew from an almost virgin territory of small scattered settlements of the indigenous population, mostly the Gbagyi, to a town of over 30,000 people. This population comprised the British colonizers, artisans from other West African British colonies, artisans and clerks from the Southern Protectorate as well as labourers and traders from the Hausa, Nupe, Kanuri, Fulani and other tribes in the Northern Protectorate.

By 1963 the town had about 250,000 residents and nearly 30 years later, the 1991 census put its population at 1,307,311, a little over a third of the population of the entire state.

Kaduna’s history reflects that of the North in particular and Nigeria in general. This history dates back before 1912, the year Lord Lugard chose it to become the dual capital of the North and Nigeria. The road to Kaduna actually started in 1900 when Lord Lugard was first appointed the High Commissioner of the Northern Protectorate. At that time Lokoja, at the confluence of the mighty rivers Niger and Benue, was the centre of British missionary activities and British trade. It was also the headquarters for its wars of occupation of the North.

Lugard first settled in Lokoja as regional capital to continue with the colonial conquest of the region. Two years later, i.e in 1902, he moved the capital from Lokoja further upstream of River Niger, to Jebba. However, Jebba remained the headquarters for only a few months. Towards the end of the year, he moved even further upstream to Zungeru with the intention of making it the permanent capital of the North. Many Nigerians will remember Zungeru, a major railway town, as the birth place of Nigeria’s foremost nationalist and first president, Dr. Nnamdi Azikiwe. His father had worked there as a railway staff.

For a while it seemed as if Zungeru had succeeded where Lokoja and Jebba had failed; it remained the regional capital for 10 years. However, with time, Lord Lugard himself began to doubt the wisdom of his choice especially given the vastness of the North which had been “pacified” by 1906. He then began a search for a more central and more accessible location than Zungeru.

His search finally ended at a location on the Zaria plains, roughly in the middle of the region. Not only was Kaduna centrally located and much more accessible than Zungeru, the Zaria plains in which it was located were well served by two major tributaries of River Niger, River Kaduna, which gave the settlement its name, and River Gurara. River Kaduna itself was so called because it was crocodile infested, Kaduna being the plural of ‘crocodile’ in Hausa.

Apart from its centrality, accessibility and abundant water supply, the location also possessed a clement environment. Also, following the not-too-happy relationship of the colonialists with the large indigenous population of Lagos as capital of the Lagos Colony and Calabar as capital of the Southern Protectorate, the British considered the virginity of a location an important consideration in their choice of a capital. Kaduna, with its sparse and scattered settlement of the indigenous population, satisfied this criterion.

No sooner had Lord Lugard settled down in Kaduna as regional capital in 1912, than he began to plan for it as Nigeria’s capital, ahead of the amalgamation of the Northern and Southern Protectorates in 1914. This followed his promotion that same year as Governor-General of the amalgamated Nigeria. As Governor-General, he did not hide his antipathy towards Lagos and recommended that the capital be moved to Kaduna as quickly as possible. “Government House, Lagos,” he wrote in one of his papers, “would make an excellent hotel if the transfer to Kaduna was achieved.”

The transfer was never achieved. First, the Colonial Office in London thought Kaduna was too far inland for quick and effective communication between motherland and colony. Second, in 1919, Lord Lugard was succeeded as Governor-General by Lord Clifford, who did not share Lugard’s loathing for Lagos. In any case, such a transfer was considered too expensive an exercise by the British.

And so it was that Lugard could not fulfill his wish to see Kaduna become the capital of both the North and Nigeria. However, as the capital of the biggest region in the country – at 730,885 square meters the North was more than three times the size of the Western and Eastern Regions combined. It was also the most populous – Kaduna City was to assume an unmatched political importance in the country, not least because it became the headquarters of the Northern Peoples’ Congress. The NPC eventually became the ruling political party in the North and the senior partner in a coalition government at the centre up to the first military coup in January 1966.

The political status of Kaduna before independence rose a notch higher when a group of Western-educated Northerners led by the late Dr. R.A.B. (Russel Aliyu Barau) Dikko, the region’s first medical doctor, founded the Jam’iyyan Mutanen Arewa AYau (Association of Northerners Today), in 1948 in the city, ostensibly as a cultural association. The JMA transformed into a political party in October 1951 and subsequently chose Sir Ahmadu Bello to lead it. It held its first convention in Kaduna in July 1952.

The most important symbol of the city’s political importance was and remains the Lugard Hall Complex, named after Lord Lugard. Located at the heart of Kaduna and painted in the national colours of green and white, the complex with its prominent dome sits on a large expanse of land that forms a huge roundabout bound almost right round by Coronation Crescent and by the northern end of the broad Independence Way on its southern entrance. It served as the regional House of Assembly and House of Chiefs during the First Republic. Today it serves as Kaduna State’s House of Assembly.

In addition to being the political capital of the North, Kaduna soon developed into a pre-eminent center of media ( Broadcasting Company of Northern Nigeria, New Nigerian and the defunct Today, Hotline, Democrat, Citizen and Reporter) and of commerce and industry in the region and in Nigeria. These developments started in 1957 as the city became the most important hub of the country’s railway network connecting Lagos to Kano, Port Harcourt to Maiduguri and Baro, the country’s then biggest and busy inland port on River Niger. The Arewa House lies on twenty acres of beautifully wooded land with equally beautiful landscape in the quiet neighbourhood of the former Ministers’ Quarters. It is located on No. 1 Rabah Road, on the grounds of the official residence of Sir Ahmadu Bello, the regional premier who was assassinated in the first military coup in the country.

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