The Forces Of Demand And Supply As It Affect The Provision Of Residential Properties In An Urban Area.
TABLE OF CONTENT
1.1 Background of the study
1.2 Statement of the problem
1.3 Aims and objectives
1.4 Research methodology
1.5 Significance of the study
1.6 Limitation to the study
1.7 Scope of the study
1.8 Definition of relevant terms
1.8.2 Supply and Demand
2.1 Hosing in Nigeria
2.2 Housing Provision and Policy in Nigeria
2.3 Land Value As A major Determinant in Housing Neighborhood
2.4 Effects of Urbanization on Housing
2.5 The current Housing Delivery Approach in Nigeria
2.6 The concept of Housing Demand and Supply in Nigeria
2.7 Major Private Factors in Urban Housing Provision in Nigeria
2.8 Private Sector Participation as an objective of the national housing policy in Nigeria
- Research methodology and the study area
3.2 Study population
3.3 Data requirement
3.4 Sample frame
3.5 sample size
3.6 Sampling techniques
3.7 Data collection
3.8 Data collection instrument
3.8.1 Administering of questionnaire
3.8.4 Descriptions of the Area
3.9 Questionnaire design
3.10 The study area
- Data analysis, presentation and interpretation
4.1 Analysis of response of estate surveyors and values
- Summary of findings, recommendation and conclusion
- Summary of finding
The problems that prompted this study on demand and housing supply include shortage in housing units, overcrowding, high rents, delay in plan approvals, substandard housing and squalid residential environments. The objectives were to assess the contribution of the private sector towards effective housing supply in Abeokuta, among others. The critical determinants of the supply of housing in Abeokuta are the rents of houses, cost of building construction, and the cost of land. Data collected were collected from users of already provided housing units in the study area. The random sampling method was adopted. The results show that the actual critical factors that affect private sector supply of housing in Abeokuta are the cost of housing production, the cost of land, housing rents, and the per capita income of urban residents. Based on the foregoing, a number of recommendations were made among which are: subsidization of the cost of building plots, the delays in plan approvals should be checked, government should increase its participation in the housing sector, the control in the price of houses as well as rents, and the formation of housing co-operative societies to enable more urban residents have financial resources to own their own houses.
1.0 INTRODUCTION AND BACKGROUND TO THE STUDY
Housing has been universally acknowledged as one of the basic needs for man’s survival. Housing goes a long way to determine not only the social standard of a man but also that of a nation and a community (Eni, 1998, Ezirim, 2005). Also, housing depicts the economic situation of a nation as it is directly related to man’s welfare and affluence. Generally, the supply and demand for housing take place in a housing market.
According to Bourne (1981), the housing market is a set of institutions and procedures for bringing together housing supply and demand, that is, buyers and sellers, renters and landlords, builders and consumers, for the purpose of exchanging houses and housing services as resources. It examines in detail the present and future trends in the supply of and demand for housing within a given area. Basically, the housing market analyses identify supply and demand factors and needs and establish procedures and processes for meeting the needs. Unlike other types of markets, the housing market has a number of distinctive characteristics. It deals with the exchange of rights and property and is, for all intents and purposes, immobile. The housing market has no specific market place where exchanges between buyers and sellers are done. Interestingly, transactions can even take place on phone.
There are two distinct types of housing market – the public sector housing market and the private sector housing market. The participation of the private sector in housing delivery consists of individuals and corporate organizations. The sector provides houses for direct use by their staff and for rental use or outright sale to the public. Unarguably, the private sector has been more efficient and reliable in the production of housing than the public sector.
According to Henshaw (2010) and Danson (2011), the housing market is differentiated by tenure such as private owner occupier, private rented accommodation and public sector housing. Conventionally, housing market has some basic characteristics such as income, type of structure, types of rights or tenure, price or rental value, quality, size of household or social class (Agbola and Olatubara, 2007).
The role and contribution of the private sector in housing provision has been vividly captured in the National Housing Policy (2004). The document spells out the functions of the private sector as follows:
- Participate fully in housing delivery particularly in the area of compliance with the provisions of Employees Housing Scheme (Special Provisions) Act (Cap 107).
- Establish primary mortgage institutions or building societies, thrift and credit societies, etc.
iii. Participate in the development of estates, and houses for sale or for rent, or shared ownership.
- Co-operate either with Federal, State, Local Governments or any agency of Government in the provision of houses, and economic growth.
In keeping with the foregoing functions and expectations, the private sector had been consistently providing over 90 per cent of the housing stock in Nigeria (FGN, 2002). Also, by 2010, it has been asserted that the private sector housing contributed about 98 per cent of the existing housing units in the country (Mofinews, 2010). In Calabar, the 2006 Population Census revealed that the private sector housing sector contributed about 86,966 or 92.9 percent while the public housing sector contributed a paltry number of 5,625 or 6.0 per cent. Thus, without doubt, housing in the city of Calabar is private sector driven.
However, the private sector has failed to provide affordable housing to the public. The key elements lacking in the private sector initiatives are that of affordability, end user-driven and value management (cost reduction). It is observed that the housing units produced by the sector are usually out-of-reach of the low income families. This study specifically concentrates on the private sector housing supply in Calabar. It has been observed that in many cities, especially within the developing countries, the population increases without a proportionately corresponding increase in housing supply. Nubi (2002) confirms this by asserting that, “in Nigeria the supply of new housing has not been able to match the demand…”. The consequences of this development are legion, including a manifestation of high occupancy ratios, high cost of rental accommodation and the emergence of derelict and blighted urbanscape. (Jacob and Ofem, 2007).
1.2 STATEMENT OF THE PROBLEM
There is a wide gap between housing need and supply. This is due largely to slow response of supply to demand. The housing market often suffers from lags in supply adjustments
(Rothenberg and Edel, 1972). If the households with inadequate housing were willing and able to pay for better housing, the response on the supply side might be long in coming. This is essentially due to the relatively long time it takes to build new houses in response to new demand. This is because housing supply is fixed on the short run and the increase in housing demand increases the equilibrium price on the long run (Agbola and Adegoke, 2007). This invariably makes the suppliers to respond to the increase in the market price by increasing the quantity of housing supplied. Housing supply naturally responds slowly to new demand, the minimum time for such a response being the time needed to mobilise all necessary resources to start and complete new buildings.
Okpala (1981) supports this view and concludes that the rate of housing construction, while it has increased and is still increasing, is not nearer to meeting existing demand, much less the extra demands created by the continuing urban population growth. The failure of the private sector housing to accommodate the larger percentage of the populace most especially the poor, necessitated the direct public housing delivery option.
This is mainly to increase the housing supply and bring relief especially to the low-income group. However, the price of housing unit has ever been a major indicator of affordability of such housing unit. Most often, due to a combination of factors, such as corruption and efficiency in public housing delivery, most housing units come at a price far beyond the financial capacity of the target group. Moreover, according to Mabogunje, Harday and Mistra (1978), the process of direct government construction of house, even when subsidized, results in the product being priced well beyond the purchasing capacity of the majority of urban residents.
1.3 AIM AND OBJECTIVES
The aim of the study is to examine the demand and supply for residential housing in urban areas in Ogun State with particular reference to Abeokuta as a case study.
In order to achieve the above aim, the following were the objectives;
- To assess the contribution of the public and private sector in housing supply in Abeokuta
- To examine the factors that affect private sector housing supply in the study area.
- To make recommendations to help alleviate the housing supply problems in Abeokuta.
1.4 RESEARCH METHODOLOGYData for the research will be collected from both primary and secondary sources. Primary Sources include administration of well-structured questionnaire, interview with respondents as well as personal observation of the research. Meanwhile, secondary data will be sourced from academic and professional journals, internet, textbooks etc.
1.5 SCOPE OF STUDY
The study centers on the issues and challenges associated to the supply and demand of residential housing units in Ogun State. The study is therefore limited to Abeokuta metropolis being the major urban centre in Ogun State. Also, it is the seat of power to all Local Government Areas in the state.
1.6 SIGNIFICANCE OF STUDY
There are existing literatures on issues involved in demand and supply of residential housing in urban Ogun. Meanwhile, this study is conducted in order to be of benefit to the following group;
It will be beneficial to the general public i.e. users of housing units as they will have enough information as regards the issues and challenges associated with the delivery of housing units by the government as well as the private developers.
It will be beneficial to Estate Surveying and Valuation firms in Lagos as they begin to work out the modalities for ensuring government properly implement the objectives of the National Housing Policy.
It will also be beneficial to students conducting research on issues involve in demand and supply of residential housing units as it will serve as a useful research material for further study.
1.7 LIMITATIONS OF STUDY
In a study of this nature, one is bound to encounter series of problems in getting the required data that will meet up with the expected standard of course, the research include the use of both the primary and secondary data and however, there were some problem encountered. These include financial and time constraints. Other notable problems that cannot over employed include high cost of transportation incurred while collection of data.
1.8 DEFINITION OF TERMS
Housing, literally is defined as buildings or other shelters in which people live, a place to live, a dwelling and to Nations a critical component in social and economic fabric. Housing represents one of the most basic human needs. To most groups housing means shelter but to others it means more as it serves as one of the best indicators of a person’s standard of living and
his or her place in the society (Nubi, 2008). It is a priority for the attainment of living standard and it is important to both rural and urban areas.
1.8.2 SUPPLY AND DEMAND:
In microeconomics, supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.