A MODEL FOR INCREASING AFFORDABILITY OF RESIDENTIAL HOUSING AMONG LOW INCOME EARNERS
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A MODEL FOR INCREASING AFFORDABILITY OF RESIDENTIAL HOUSING AMONG LOW INCOME EARNERS
However, Aribigbola, (2008) stressed that the provision of affordable and decent housing for Nigerians has been a top priority for successive governments since the country’s independence in 1960. Unfortunately, Awotona, (1990) argues that Nigeria has yet to develop an effective housing delivery program that would enable the country to achieve the goals of its housing for all policy. More so, Ikejiofor(1999b) concluded that the federal government would require more than N56 trillion to provide 16 million housing units to bridge the housing deficit in the country. Nigeria is sitting on a growing housing deficit estimated at 17 million housing units, and even a higher number of Nigerians living in either substandard or sub-human accommodations, feelers indicate there are plans to change this grim social reality. However, after expending colossal resources worth billions of dollars, it recorded a miserable failure as a result of lack of political wills; institutionalize policy and continuity, politicization of the programs, political corruption, poor funding and inadequacy of mortgage institutions, poor socio-economic elements among others have contributed to the acute failures (Awotona, 1990; Ikejiofor 1999b; Aribigbola, 2008).
1.1 BACKGROUND OF THE STUDY
According to Gabriel, (2015)the housing affordability crisis has been growing in recent years and is increasingly documented in recent media reports. One of the biggest problems Nigerian low-income households face today is finding affordable, safe and appropriate housing. Similarly, Jacobs (2015) argues that, although this has been a question for some time, concerns that the problem has worsened and affecting moderate households such as low-income households have made it A priority (Gabriel & Jacobs 2015) At all levels of government. However, housing is one of the three basic needs of man and it is the most important for the physical survival of man after the provision of food (Turner, 1983; Munonye, 2009 and Olayiwola et al, 2005). It has a profound influence on the health, efficiency, social behaviour, satisfaction and general welfare of the community. Okedele et al (2009) opined that, in the evaluation of man’s comfort, growth and development, it is inevitable that housing be considered as a critical element.It is no doubt that housing is an important national investment and a right of every individual, the ultimate aim of any housing program is to improve its adequacy in order to satisfy the needs of its occupants (Olotuah and Aiyetan, 2006). Adequate housing provides the foundation for stable communities and social inclusion (Oladapo, 2006). Adequate housing contributes to the attainment of physical and moral health of a nation and stimulates the social stability, the work efficiency and the development of the individuals (Olayiwola et al., 2005).
Nevertheless, the housing situation in Nigeria is characterized by some inadequacies, which are qualitative and quantitative in nature (NHP, 1991; Oladapo, 2006). In Nigeria urban housing problems manifest in overcrowding, slum housing and the development of shanties in virtually every major city (Nubi, 2008). These problems vary from inadequate quantity and quality of housing to the attendant impact on the psychological, social, environmental and cultural aspects of housing. The cost of adequate housing is currently beyond the reach of most Nigerians. This, thus, brings in the financial dimension – the question of the affordability of residential housing among low income earners. The challenge becomes not only to provide the houses but to make the houses affordable to the average Nigerian worker.
Furthermore, Hassan, (2014) maintains that there is substantial evidence of a growing housing affordability problem in Nigeria as well as in some developing countries. The incidence of the problem ranged from very low-income households to low-income households to modest-income households. There is now a consistent call for housing systems to retain “key workers” and “working poor” in established areas to ensure access to employment, education, and public transport, other facilities and equipment (Hassan, 2014).
On the other hand, Isaac, (2013) argues that the income of the Nigerian medium is generally not sufficient to meet its needs to own a house of its choice or rent an apartment of its own taste. Other challenges facing Nigerians in access to housing, as listed by Onyike (2007), include the cost of land and building materials, high interest rates on mortgages, the financing system Poorly developed mortgage and administrative bottlenecks that make approvals necessary, Certificates of Occupancy and other necessary governmental authorizations, a nightmare, and unmitigated corruption in the allocation of government land under the Act On land use, Cap 202 LFW, 1990. Moreover, Adedeji (2012) states that growing urbanization in the large cities of Nigeria, as brought about by urban migration in urban areas has led to the population of more of these cities and towns, including Idah, a neighborhood General of the local government in Kogi State. This has been the subject of numerous studies.
In addition, Ademiluyi, (2011) opined that only a few have focused on housing affordability, which is a serious problem in these centers. Decision-makers in the US Department of Housing and Urban Development (HUD) stated that for a housing project to be affordable, the family should pay only 30% of its total income on rent and services Public, More than 30% of their mortgage payments, insurance, taxes and utilities.This definition recognizes that each household has additional essential expenses to be retained. Housing is therefore affordable only if it meets this criterion of 30% (Ademiluyi, 2011). Affordable housing, according to Raji, (2011) is that housing that does not cost more than 30% of household income occupying. And that any family that pays 50 percent or more of the income of the house is under severe housing burden. A family paying more than 30% of their income for housing is considered a cost burden and may have difficulty in providing other necessities such as food, clothing, transportation and medical care (Raji, (2011).
Cox and Partelich (2010) are of the view that for the metropolitan area to assess affordability and ensure that housing bubbles is not triggered; housing prices should not exceed three times the gross annual income of the House. In simple terms, again Ademiluyi, (2011) argues that housing affordability refers to the ability of households to cope with other basic costs of living. Thus, it will be seen that the problem of housing affordability is a crucial determinant of people’s quality of life. Partelich (2010) added that it is crucial to assert that if state governments have built up areas are more or less allocated to civil servants on the basis of owner-occupiers, those built by private developers are sold at exorbitant rates.
This situation is explained by Adejumo (2008) when Adejumo states that in all cases houses are not to be rented, but to be sold, because these developers have taken large loans from banks to finance their construction projects, Their goal is necessarily to get a quick return on their money; Therefore, they prefer to sell these homes, usually at high prices, to ensure they have a minimum of 50% profit. After completing the sale, they usually have 100% profit, if not more. This leaves Nigerians who are not civil servants and are not rich in cold in adequate housing. The cost at which the house reaches the market will go a long way to determining affordability. An employee’s income determines his ability to pay for a home. If the unit cost of construction is abnormally high as we have today, the simple implication is that few people will be able to afford it (Bello, 2008). The limited financing available will not be able to spread around potential homeowners. The gap between income and housing costs in Nigeria is very wide. This has eliminated low-income people from the housing market. According to Bello (2008), high costs were attributed to: Increase in the cost of building materials, inflation in the economy, high standards of space and quality adopted by designers, fees of professionals involved In drawings and construction,. The average income of Nigerians is too low to support the construction of buildings in the short to medium term (Opaluwa, 2010).Many found it difficult to cope with a regular and fast rent payment as this makes the aspiration of the Nigerian average to possess a suitable house or apartment rented almost elusive.
On the other hand, Ademiluyi and Raji (2011) explain that a recent World Bank report noted that two of the more and more crucial urban development problems that Nigeria face are the financing of urban infrastructure and institutional arrangements for the provision of housing In urban centers. Also Diogu, (2013) stressed that the provision of basic utilities and services, particularly housing, succession in the responsibility of the government, which has been handicapped recently by declining political will and many other factors. Ajanlekoko (2001) argues that housing finance is inherently a capital intensive business that, if financed by personal financial resources, requires a slow and tedious accumulation of savings.However, Onyegiri, (2013) opined that since housing provides benefits over many years, long term credit financing is a more logical option as it will spread the burden of repayment. Then this requires the availability of long-term financing, according to Diogu, (2013)for which there must be an institutional capacity, structure and mechanism that will allow a practical and effective link between savers / investors and consumers of these funds. The concept of National Housing Fund or proposed in the National Housing Policy is to ensure a continuous flow of long-term financing for housing development and provide affordable loans for low-income housing (Diogu, 2013).
Besides, Ojenuwah, (2012) postulated that the promulgation of the decree of the National Housing Fund announced the emergence and establishment of a battery of mortgage financing institutions in Nigeria. Many of them were active in Nigeria. Although the plan’s intent appears, the technicalities and procedures for releasing mortgage lending to members of the public have not been developed and, as such, most potential clients have been frustrated by the high interest rate and the cost of financing. According to Okedele, (2009) most mortgage institutions themselves have raised funds by accepting deposits and savings at a very high interest rate in a highly competitive marketing environment.Adebayo, (2009)added that most clients on the other hand are willing to expect the National Housing Fund to take out loans at high interest rates that is currently dictated by the money market condition. It is noteworthy that Aribigbola (2008) observed that the national housing policy does not want a Nigerian spending more than 20 per cent of its income on housing spending. Ikweca, 2009 also maintained thatthis is a welcome development that the realities of the current Nigerian living situation will not allow. Then Uduma-oluya, (2009) opined thatit is clear, therefore, that while affordability of housing is within the reach of the average Nigerian, the government must be prepared to do more by creating an enabling environment for private sector participation that will encourage coverage across the country rather than Concentrate on the large Cities alone where their monetary interests will be protected (Uduma-oluya, 2009).
1.2 STATEMENT OF THE PROBLEM
Projections indicate that the number of people living in the cities of Nigeria will reach 100 million by 2020. Although the growth rate of the urban population is currently decreasing (it has fallen steadily from 5.7% in 1985 to 4.0 %in 2015), much higher than the overall population growth rate of Nigeria. Available data reveal that the urban population of Nigeria has experienced alarming growth. Nigerian cities are exploding – growing by leaps and bounds. A little over 50 years ago, less than 7% of Nigerians lived in urban centers (ie, settlements with populations of 20,000 or more). This proportion rose to 10 per cent in 1952 and to 19.2 per cent in 1963. It is now estimated at about 55 per cent. In fact, Nigerian cities are among the fastest growing in the world. The rapid growth of the population in Nigeria has not been offset by a corresponding increase in housing stocks. Increased rural-urban drift explains rapid urban growth. Housing problems in the country, as in most Least Developed Countries (LDCs), encompass the quantitative inadequacy of housing, the structural deficiency in the quality of existing stocks and poor aesthetic condition of the housing environment. While these are manifested fully in urban areas, in the rural areas where the vast majority of Nigerians live, the problems of housing is in the low quality of their buildings (FGN, 1990).
Rapid growth of cities due to rapid urbanization has led to the emergence of low income settlements of the inner-city and on the outskirts that can be classified as shanty towns (Aina, 1990). Informal (squatter) settlements are unauthorized developments at the fringes of most developing cities. Their birth is usually due to rapid urbanization which gives rise to acute housing shortage. Residents are mostly low income families, from rural areas or victims of urban renewal schemes. Lastly, the problems and challenges posed by this rapid urban growth are immense. Very scary and perhaps more easily observable are human and environmental poverty, declining quality of life and the untapped wealth of human resources they represent. Housing and related facilities (water, electricity, etc.) are also inadequate, resulting in millions of people now living in substandard and subhuman environments, flooded with slums, misery and inadequate social facilities such as Schools and sanitary and recreational facilities. The progressive decline of social values and the collapse of family cohesion and community spirit have led to an increase in juvenile delinquency and crime.
1.3 OBJECTIVES OF THE STUDY
The main objectiveof this study is to provide a model for increasing affordability of residential housing among low income earners in Delta State Civil Servants. The specific objectives are to find out the following:
- To determine the required housing quality for low income earners in Delta State.
- To determine the perception of the occupants of the housing estates in Delta State.
- To determine the factors hindering low income earners civil servants from assessing decent accommodation in Delta State.
1.4 RESEARCH QUESTIONS
The following research questions were formulated to guide this study:
- What is the required housing quality for low income earners in Delta State?
- What is the perception of the occupants of the housing estates in Delta State in Delta State?
- What are the factors hindering low income earners civil servants from assessing decent accommodation in Delta State?
1.5 RESEARCH HYPOTHESES
The following research hypotheses were formulated to guide this study:
H0: There is no significant relationship between the housing quality and low income earners in Delta State.
H1: There is a significant relationship between the housing quality and low income earners in Delta State.
H0: There is no significant relationship betweenthe perceptions of the occupants and affordability of housing estates in Delta State.
H1: There is a significant relationship between the perceptions of the occupants and affordability of housing estates in Delta State.
H0: There are no factors hindering low income earners civil servants from assessing decent accommodation in Delta State.
H1: There are factors hindering low income earners civil servants from assessing decent accommodation in Delta State
1.6 SIGNIFICANCE OF THE STUDY
The growth rate of the urban population is more pronounced in Nigeria than most other countries on the African continent. The number of urban centers in Nigeria has increased drastically over the past hundred years. The resulting effect has been the formation of more densely populated urban centers.In this study, the researcher set out to investigatea model for increasing affordability of residential housing among low income earners using the civil servants inAsaba, Delta State with the aid of highlighting the inherent problem facing low income earners in assessing affordable residential housing. It is expected that this work will be of interest to government, students and the general public.
However, this study will also help to serve as literature (reference source) to governments at all level, students, individuals or corporate bodies into what to carry out on further research on affordability of residential housing among low income earners in Nigeria.
1.7 SCOPE/LIMITATION OF THE STUDY
This studyinvestigated a model for increasing affordability of residential housing among low income earners with a particular reference to civil servants inAsaba, Delta State.
Distance and its attendance cost of travel in order to obtain the needed information which to write this study becomes a major limitation. Another limitation to the study is short time factor which did not give time for thorough research work, hence gathering adequate information becomes very difficult. Finally, lack of materials on the topic; this is new in the area of model for increasing affordability of residential housing among low income earners. Therefore, the researcher resolved to seek friendly approach in order to obtain the needed materials or information from the area under study through the administration of questionnaire.