THE IMPACT OF RISING COST OF BUILDING MATERIALS ON RESIDENTIAL PROPERTY DEVELOPMENT

THE IMPACT OF RISING COST OF BUILDING MATERIALS ON RESIDENTIAL PROPERTY DEVELOPMENT

(A STUDY OF NASARAWA TOWN IN NASARAWA STATE)

ABSTRACT

Apart from food and health which include state of being well and free from illness, shelter is one important thing that makes the life of a man standard. It is also a certain that every person want to own a house as a place of his private security to his property and as well as a place for him as a resident. But still when we come to shelter it is still a problem because of the nature of our economy. The Federal Government of Nigeria has also attempted to solve the housing problems by creating or formulating policies, programmers with the word rising cost of building materials in the country. In fact, financing is the most fundamental central point of every project ‘residential development’ for that in the absence of a well-organized and effective financing scheme, a project may not be feasible because of building materials and other components which contribute to about 60% – 70% cost of the construction. The research work highlight the effect of rising cost of building materials on residential property development in Nasarawa L.G.A of Nasarawa State. The simple random sampling techniques were involved in the administration of questionnaire through detailed market survey to ascertain the trends in price of building materials.

CHAPTER ONE

1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Building materials cannot be precisely defined, but it covers a wide range of materials basically used in the building construction industry, these materials vary from their natural state to those partially or completely processed in the manufacturing industries.

Therefore building materials include aggregate, bricks, timber, ceiling, cement, paint, doors, Windows, roofing sheets, iron and steel product, sanitary waves, electrical fittings etc. building materials includes material components used in building industry.

The fluctuations in the cost of building materials have a pronounce effects on property investment (rental value) in Nigerian society. The fluctuation in the cost of building materials began in civil war.

The changes could be attributed to a number of factors such as government policies, that is, effect on modern technology which necessitated the development and use of new materials and quicker methods changes in tastes of client due to need for better housing, high professional service charge etc. these factors continue to present themselves and if they are ignored as it is the case now they will continue to pose problems on the generality of the populace because of the psychological, social and economic effects on the property value in whatever form, be it residential, commercial or industrial. The project is aimed at assessing the relationship between the cost of building materials and rental value of residential property and at the end of the findings, possible control measures shall be propose as recommendations.

“According to Garba (1989) said investment in real property depends on many factors among which are cost of construction, market forces, that is demand and supply, lending rate at which investors borrow from financial institution and most importantly, the prevailing socio-economic condition of the country.

Therefore, a rational investor in real property should always strive to consider the aforementioned factors.

The extent to which any meaningful property investment can be realized depends on how proper the question of feasibility and viability has been considered, weighed and analyzed. If all variable answered in the affirmative, then a worthwhile investment can be justified.

The level of economics growth of a nation practically the developing ones depends to a certain extent on the level of participation by both public and private sector of the economy on the value of real property investment, this is because of various fluctuations served by value of property investment as mentioned earlier.

Due to the snag of rate of property investment, these statement can be well supported from information gathered, regarding the trends in value from time of Nigeria oil boom (1973-1982) as compared to the last five years ago (2009-2014) because of the economic buoyancy experience that period, there was a high rate of value in real property investment which can be said to have characterized the order of the day.

1.2 STATEMENT OF THE PROBLEM
This research looks at the effect of rising cost of building materials on residential property development in Nasarawa, Nasarawa State, and the most basic problems is that building materials at times goes up and the cost of houses keep going up, even it is by one kobo that building materials goes up, it affects the whole cost and scale of development. When the cost of developing a residential house is high as a result of high cost of building materials, the effect of this is felt in the rental value of such a property.

1.3 AIM AND OBJECTIVES
The aim of this work is to examine the effect of rising cost of building materials on residential property development.

To achieve this aim, the following objectives shall be looked into:
a. To review literature on cost, property development and building materials.

b. To examine the trends of the prices of building materials. (Between 2009- 2014).

c. To examine how rising cost of building materials has affected residential property rental value in the study area.

d. To proffer solution on solving the effect of rising cost of building materials by introducing the use of alternative building materials.

1.4 RESEARCH QUESTION
This research work tends to address some fundamental questions, which are as follows:

1. What is the trend of prices of building materials in Nasarawa Between 2009-2014?

2. What is the effect of rising cost of building materials on residential property value in study area?

3. What are the solutions to the effect of the rising cost of building materials on residential property development?

1.5 HYPOTHESIS
Ho- There is no significant relationship between building materials and residential property development.
Hi- There is a significant relationship between building materials and residential property development.

1.6 SIGNIFICANCE OF THE STUDY
This research will help to know the effect of rising cost of building materials on residential property development. It will also serve as reference materials to students and it will also aid the government the opportunity to know which area to tackle in rising cost of building materials so as to reduce the problem being face by residential property developers. Lastly, it will also be of relevance to developers who desire to invest in housing.

1.7 SCOPE AND LIMITATION
The scope of this research is limited to residential property development in Nasarawa town, of Nasarawa State among other types of property development.

Some obstacles encountered in the course of carrying out this research were as follow:

• Time factor was the major constrain couple with multiplicity of other classroom work and lecture requirement were a set back to the research.
• Un-cooperating attitude of some respondents as they were busy to attend to the researcher.
• In accessibility of adequate information from research respondent due to illiteracy among them, some find it difficult to understand some question they were asked.
• Finance was also a limiting factor in the course of the research.

1.8 DEFINITION OF OPERATIONAL TERMS
Cost: Oxford Advance Learner’s Dictionary (6th edition) define it as the amount of money that you need in order to buy, make or do something.
Building: a structure with a roof and walls such as a house, school, store, or factory.
Materials: a matter from which a thing is or can be made.
Building Materials: this is any material which is used for construction purposes.
Property: a thing or things belonging to someone; possessions collectively.

Residential: an area primarily used for housing.

Development: this is a process of developing or being developed.
Property Development (The Collins English Dictionary,2014): the business of buying land and buildings and then making improvements to them so that their selling price exceeds the price paid for them.

1.9 HISTORICAL BACKGROUND OF THE STUDY
Nasarawa state was created on the 1st October, 1996. By the Abacha government, Nasarawa State is bounded in the North by Kaduna State in the west by Abuja the Federal Capital territory in the South by Kogi State and Benue State and in the East by Taraba State and Plateau State.
A network of road exists within the state linking all rural areas and major town.
There are thirteen local government areas in the State which are Akwanga, Awe, Doma, Karu, Keana, Keffi, Kokona, Lafia, Nasarawa Eggon, Obi, Toto and Wamba.