CHAPTER ONEINTRODUCTION

1.1 BACKGROUND TO THE STUDY  

Housing can be defined as buildings or structures that individuals and theirfamily may live in that meet certain federal regulations. Housing provision policiesand approaches have long been implemented in many developing nations in a bid toenhance its affordability as an inevitable human need (Teekhong 2012).Ademiluyi (2010) opined that housing represents a major area of deprivationfor the urban poor. The rate of provision of new housing stock in Nigeria has laggedbehind the rate of population growth which is responsible for the formation of slums,growth of squatter settlement and higher rent behind the affordable limit of the poor.Housing is one of the three basic needs of man and it is the most important forthe physical survival of man after the provision of food (Turner 1983, Munonye 2009and Olayiwola et al 2005). It has a profound influence on the health, social behaviour,satisfaction and general welfare of the community. (Okedele et al 2009) opined that inthe   assessment   of   man’s   comfort,   growth   and   development,   it   is   inevitable   thathousing be considered as a critical element.Over the years, governments had  embarked  in  several  housing   interventionprogramme with the objectives of making available and affordable to the majority ofthe   population   these   housing   intervention   are   reflected   in   the   annual   budgetaryprovisions for housing urban development, and in establishment of institutional framework for housing development (Diogu et al 2006).1

According   to   Aribigbola   (2009),   despite   the   various   effort   of   government,individual   and   agencies   both   locally   and   internationally   to   improve   housingprovisions,   Nigeria   housing   problems   particularly   shortage   and   affordability   stillpersist. This undo the popular believe to the growing international concern over theissues. Affordable housing according to Andrew (1998), United states department ofhousing and urban development (2005) is that housing which does not cost more than30% of the income of the occupant household and that any family that pays 50% ormore of household income on housing are considered cost burden and many havedifficulty affording other necessities such as food, clothing, transportation and medicalcare. The provision of basic utilities and services particularly housing is partially theresponsibility   of   the   government   who   has   been   handicapped   in   recent   time   bydeclining political will and many more factors.Ajanlekoko (2001) put it  that, housing finance by its  very nature is capitalintensive venture which if it is to be financed through personal finance resources willrequire slow and tedious accumulation of savings. However since housing financeprovides benefit over many years, long-term credit finance is a more logical opinionas it will spread the repayment of burden but this requires the availability of long-termfunding and for which there must be institutional capacity, structure and mechanismthat will allow a convenient and effective linkage between the savers and investorsand the consumer of such funds The concept of the national housing fund in the national housing policy is to ensure acontinuous   flow   of   long-term   funding   for   housing   development   and   to   provideaffordable loans for low income housing. 2

It   is   pertinent   to   write   that   Aribigbola   (2008)   observed   that,   the   nationalhousing policy does not want any Nigerian to spend more than 20% of its income onhousing expenditure. This is a welcome development that the realities of the presentday Nigerian living condition will not permit.It is therefore obvious that, if housing affordability, will be within the reach ofthe average Nigerian, government must be prepared to do more by the way of housingdelivery. Hence, research is conducted to assess the affordability of Federal HousingEstate using Oke-Ila Ado-Ekiti as a case study.1.2 STATEMENT OF THE PROBLEMThe rate of urbanisation in Nigeria has witnessed tremendous increase in thelast two decades. Census in the early fifties showed that there were about 56 cities inthe   country   and   about   10.   6   of   the   population   lived   in   these   cities.   This   rosedramatically to 19.1% in 1963 and 24.5% in 1985 (Ajanlekoko, 2001).  Today,the   national  population is now   estimated to be   about   120 million with   the urbanconsisting about 30%. The rapid growth rate of urban population in Nigeria since theearly seventies was mainly due to immigrating induced by the concentration of thegains from oil sector in the urban areas.Given the expected increases in urban population, the magnitude of housingproblem in the country is enormous. According to the National Rolling Plan (NRP)the national housing requirement is between 500,000 and 600,000 units consideringthe   prevailing   occupancy   ratio   of   between   three   and   four   persons   per   room(Ojenuwah, 2006; Moughalu, 1999). If this estimated annual requirement was to beprovided at an average of N500, 000 per unit, the cost would be enormous and indeed3

unrealisable. The cost of providing housing alone would be between N250 Trillionand N300 Trillion (excluding the cost of infrastructural development). This is to saythat the Government and Mortgage institutions will need this much as capital base toeffectively tackle the housing the housing situation.The phenomenal rise in population, number and size of cities over the past fewyears have manifested in the acute shortage of dwelling units which resulted in highrents   and   other   ills   such   as   poor   urban   living   condition,   high   crime   rates,   lowinfrastructure services and so on. On the micro- level, it has been observed that houseownership is one of the first priorities for most households and it represents the largestsingle   investment   for   most   (between   50%   and   70%   of   household   income).   Thisobservation becomes very significant when it is realized that per capital income inNigeria has been on the decline (currently N 3, 000.00) as well as the real income ofthe average Nigerian. The rapid up-swing in the prices of building materials in the lastfive years has further reduced the affordability for most Nigerians. Relating annualrequirements for housing with the Gross Domestic product of N 82.53 billion in 1988and 85.82 billion estimates for 1989, and over 88billion in 1991 as well as per capitalincome of  N3,000.00, financing becomes a major factor of the problem especiallylong term funding.Except   the  problem  of  how   to   finance   the   construction   of   housing   for   allincome groups is effectively addressed, the housing affordability problem is bound tofurther escalate