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.