EVM 421

SOCIOLOGY OF HOUSING
DEMAND AND SUPPLY OF HOUSING
Among the three basic necessities of man, housing plays an important role. It has
an implication on the mental, psychological and social wellbeing of man. Both the
public and private sectors have contributed in various ways for the purpose of
meeting ever increasing housing demand in Nigerian urban cities. However, upon
the involvement of these sectors, the problems of housing provision in meeting
the housing demand remains the same. Housing has a profound impact on the
health, welfare and productivity of the individual. Others are clothing and food.

Housing must not be considered purely as shelter but against lifestyle which
encompasses with economic, social and educational needs which must be able to
meet the need and aspiration of the residents as well as contribute to the
physical, mental, social wellbeing of the people and provide maximum quiet
environment, living and outdoor space, privacy, cleanliness, safety and aesthetic
satisfaction.

Migration of people from rural areas to urban centres has been increasing at an
alarming rate. The consequences of this migration decision have resulted in the
increase in housing demand in most of our urban centres in Nigeria. Both
government and individuals are being so concerned in the provision of both
quantitative and qualitative housing to meet the demand of the ever increasing
population in Nigerian urban cities. Unfortunately, the efforts in making provision
for an adequate housing unit for Nigeria populace are yet to be fruitful. The
problems of the inadequacy of the building materials, indigenous landowners,
inaccessibility to funds and so on are the major constraints that led to price
increases of the housing construction which has consequently made it impossible
for people of low income or middle income to acquire their personal house. The
price of land is beyond the reach of most individuals and even where government
partners with developers, the land allocation costs and charges make it
impossible to deliver the housing unit at an affordable price for the low-income
market. The relatively small size of the land resource base coupled with its
historical and current pattern of ownership presents a serious constraint to
housing. Another deterrent to housing production by both the private and public
sectors is the high investment cost of land infrastructure particularly where the
development is distant from existing infrastructure. Increasing rural urban
migration, Inadequate finance mechanisms for low-income housing, Inadequacy
of administrative and legislative framework, Cumbersome regulatory approval
process, Lack of integrated planning in housing programs, Inadequacy of housing
information system, Limited private sector involvement and Inefficiency of
housing construction are part of constraints facing the sector.

The desire of people to live in an urban centre is increasing at an alarming rate.

Various reasons have been attributed to an increasing taste for urban living and
these reasons include employment opportunity, urban amenities and utilities
consumption opportunities. The situation has consequently led to housing
shortage and most people are also found living in non-decent building apartment
due to their socio-economic background which cannot cope with ever increasing
price of decent house.

There is a wide gap between the demand for housing and its supply (Glaeser and
Gyourko, 2018). This could be attributed to the fact that the rate at which housing
is supplied is not commensurate with the speed of growth of urban population
and the need for housing. The implications of shortage in the supply of housing
include: overcrowding, slum and squatter proliferation, development of poor and
sub-standard housing, unhealthy and poor environmental condition, low-quality
living condition, insufficient and scanty infrastructure, homelessness, ever
increasing rate of poverty and social misconduct (Jiboye, 2009; FGN, 2004). A
number of factors, which include: rural-urban migration, the inability to replenish
old cum decaying stocks and at the same time meet the rising demand for
housing, have contributed to raising the housing supply deficit in Nigeria. It is
estimated that Nigeria’s housing deficit is between seventeen (17) and twenty
(20) million units of housing with a growth rate of about 20 percent a year (UN-
HABITAT, 2008; Jiboye, 2009). In the formal housing sector, the total output is
estimated to be between the range of 100,000 per year and 200,000 per year,
whereas more than 700,000 housing units are required per year to meet the rate
of urban population growth in this country (World Bank, 2018). Since the era of
colonial administration in Nigeria, many attempts have been made through a
number of programmes by the government towards increasing housing supply.
Some of these include: the construction and provision of official quarters in
designated areas called government reserved areas (GRAs), extension of credit
facilities to building societies, housing cooperatives, “direct” and “active”
participation in housing provision through capital investment in the sector
resulting in increase in domestic production of cement and burnt bricks, control
of rent through edicts, low-income housing schemes, site and services
programme, and so on (Akinyode and Tareef, 2014). However, the impact of
these programmes has been negligible as it did not significantly reduce the
problem of homelessness or improve the urban housing situation in Nigeria.

EFFECTIVE HOUSING DEMAND & DESIRE HOUSING DEMAND

Housing demand can be explained as the willingness and ability of housing

consumer to pay for a particular dwelling depending upon such consumer’s
incomes, house type, location preferences and local prices. Demand is the
quantity of good or service that consumers are willing and able to buy at a given
price at a particular given time period. Demand for housing at certain price refers
to the value that is placed on a house linked with the satisfaction derived in such
house.

Housing demand is the number of dwelling units that are actually needed by the
people at a particular point in time, while housing supply is the number of
residential units that are provided by the key players in the accommodation
provision.

EFFECTIVE HOUSING DEMAND (EHD)

This can be explained as a desire to buy a house that is backed up with an ability
to pay for it.

DESIRE HOUSING DEMAND (DHD)

This can be termed to be willingness to buy the house with the consumer’s lack
of the purchasing power to be able to buy the house. Until there is purchasing
power in terms of money to buy the housing unit, such housing demand has not
become effective housing demand.
The main determinant of the housing demand is household composition while
other factors such as income, price of housing, cost and availability of credit,
consumer preferences, investor preferences, prices of the substitutes and price of
the complement also play a role.

Housing supply is produced using land, labour and various inputs such as
electricity and building materials. The quantity of the new supply is determined by
the cost of these inputs, the price of the existing stock of houses and the
technology of production. Housing is in inelastic supply in some cities either
through little or no open land, restriction of local regulations on development that
make it prohibitively expensive or slow.

The materials cost of building, unbearable conditions on getting loan from the
mortgage banks and government policies have been factors militating against the
achievement of the effort of public developers and private developers, that is, the
government and individuals in bridging the gap in housing supply and demand.
Another major shortcoming has been with ownership rights under the Land Use
Act 1978 which confers ownership of all land to the Governor of each state and is
substantial deterrent to housing and housing investment in Nigeria. In actual fact,
this right of occupying is endorsed with a Certificate of Occupancy. Indigenous
building materials and technology, provision of habitable houses at subsidize rate
and amendment of some parts in 1978 land use act in order to assist in increasing
housing delivery. Among the factors that affect the supply of housing to meet the
demand is the time of housing process. The complexity and time duration in
housing supply is one of the major problems which contribute to the shortage of
housing supply to different socio-economic status of housing consumer. Housing
takes long time to construct and cannot easily be made ready for consumption if
there are changes in demand. The rate of housing construction, while it has
increased and is still increasing, is not nearer meeting existing demand, much less
the extra demand created by the continuing urban population growth.

GOVERNMENT EFFORTS IN HOUSING PROVISION

Governments all over the world are directly and indirectly involved in matters
relating to housing in terms of its housing provision, regulation and control,
development and administration. In Nigeria, the involvement of government in
housing dates back to the colonial era and has since continued thereafter, that is,
post-independence and the civilian administration between 1979 and 1983.

a. Colonial/Pre-Independence Period

This was when activities were chiefly on construction and provision of official
quarters to the expatriate staff and selected indigenous public service employees,
mainly in the areas designated as Government Reserved Area (GRAs). These
projects were done autocratically without inputs of Civil society and relevant
stakeholders. There was no painstaking management of the estates so created
and consequently led to the failure of the programs. Government did not make
effort to build houses either for sale or rent to the general public. This marked the
commencement of what could be described as the National housing development
plans. The housing estates were in the form of staff housing schemes.
Organisations like Lagos Executive Development Board (LEDB) and the Nigerian
Building Society (NBS) were charged with responsibility of providing housing for
the members of the public, though Lagos had started to experience an increasing
wave of urbanization and attendant problems of overcrowding and unsanitary
conditions and subsequently induced the first urban development project in the
country. Unfortunately, these institutions served the middle and high income
groups only because of lack of adequate finance, technical personnel as well as
inappropriate and relevant building/construction technology.

b. Post-Independence period

The civil war between 1967 and 1970 and state creations aggravated the problem
of housing shortage and subsequently contributed to the government’s
involvement in housing programs during post-independence period. This period
coincided with the implementation of the national development plans. The
formation of the National Council of Housing in 1971 is seen as a practical attempt
by the Federal government at tackling the national housing problem in Nigeria.
The federal and state governments decided to withdraw from direct involvement
in the construction of dwelling/housing units for workers, preferring the
expansion of credit facilities to building societies, housing corporations and the
numerous staff housing schemes. This period also recorded phenomenal growth
in the building industry of the federal government’s indirect participation in
promoting housing delivery through the provision of land and building materials
such as cement, iron-rods, and roofing sheets. Despite the liberation of the
importation of these items, the efforts during this period did not make impact on
the housing need of the medium and low-income groups.

c. Civilian Administration Period

During the civilian administration period, provision of housing became a major

political issue as the government at the centre made shelter one of its core
political programs. Unfortunately, the governments housing policy was based on
faulty strategy because errors and or/ mistake of the previous housing policies
were either ignored or improperly considered with the attendant outcome that
the program failed before it was started.

It was obvious between 1983 and 1988 that the government’s performance
towards increasing housing stock was generally low when compared with
previous housing programs and efforts. This was resulted from the inconsistent
role of the government because every successive government tended to initiate a
housing policy and/or program, which it would want to execute during its life
span. In 1989, the federal government adopted some strategies. This includes
restructuring of the Federal Mortgage Bank of Nigeria to serve as the nation’s
apex housing finance institution. Savings were to be mobilized through the
National Housing Fund (NHF), whereby government would ensure continuous
flow of funds to Federal Mortgage Bank for lending to other primary Mortgage
institutions. Various Nigerian governments at various times have used various
means to tackle the problems. Efforts being made include the provision of loans
through mortgage institutions, sponsoring of owner-occupier housing schemes,
rent edicts (Rent control) and low-cost housing to mention but a few. None of
these have significantly reduced the problem of homelessness among Nigerians,
especially among the low income households because socio-economic
backgrounds of the people in relation to their housing demand have not being
considered.

CHALLENGES IN ACCESSING HOUSING

For the fact that the long-term finance for housing development is not available,
this compels manufacturers of housing to recover their funds within the shortest
time. In these circumstances, the development of non-mortgage housing finance
products, such as housing microfinance, could be very usefully explored. Other
tasks to the improvement of the Nigerian housing provision include:

1. Macroeconomic tasks. Inflation in Nigeria is still in double digits. Investors,

lenders and borrowers desire a stable economy where judgements can be
taken without year.
2. Policy and regulatory tasks. The Land Use Act 1978 has been responsible for
the lengthy administrative procedure of securing the Certificate of
Occupancy, the document that confers ownership of the land to the
individual from the government.
3. Taxes and Fees. The levy problem on housing provision and development in
Nigeria is huge. Value added tax (VAT) is deducted at numerous stages of
the building approval, aside from titling fees and stamp duties.
4. Property registration and building approval is generally slow, burdensome
and expensive. Time has been reduced from 274days to 80 days from 2008.
5. Financial sector tasks. The insufficient resources and capital base of most
primary mortgages limits their ability to deliver needed finance.
6. Inaccessibility of secondary market as there is no well-organised secondary
mortgage market linked to capital markets and institutional investors.
7. Unavailability of credit enhancement vehicles like mortgage insurance to
guarantee credit risks up to certain loss levels for loans with high loan to
value ratios.
8. Limited skilled manpower leading to inadequate capability for the essential
expertise required in the housing finance in Nigeria as the market has not
been in existence for a long time.
9. Importation of building materials which is about 60% of the building
materials required results into high cost of houses in Nigeria.

GUIDING PRINCIPLES FOR IMPLEMENTATION OF HOUSING DELIVERY

A comprehensive approach which mobilises and harnesses the combined efforts

of the private and public sectors as well as civil society. These include:

1. Planning standards to develop safe, disaster resister and quality housing.

2. Affordability. Housing must remain affordable in order to meet the
satisfaction of all households sine land and house prices, rent and
construction costs have risen more rapidly than real incomes.
3. Partnering. The mobilization and harnessing of the combined resources,
efforts and initiatives of public and private sectors, community
organizations, civil society and the international community is essential to
housing all citizens.
4. Sustainability by way of paying due regard to social, historical, economic,
and ecological concerns.
5. Empowerment and self-sufficiency. Housing does not only fulfill the basic
need of shelter, but also plays a vital role in the economic and social health
of the nation. Economic growth and prosperity enhances the creation of
integrated communities and fosters a sense of pride, which could
encourage family self-sufficiency.
6. Efficient land use in order to maximize the number of housing units and
foster the provision of infrastructure in a cost-efficient manner.
7. Housing Information management. Pertinent information on the socio-
economic status of households is necessary in developing meaningful
strategies to address the housing situation. The collection and
dissemination of housing data and information are imperative for proper
decision making and analysis of existing and planned intervention.
8. Desirability and variety. The provision of a wide variety of housing solutions
is necessary to facilitate choice, as well as consumer desirability.
9. Priority areas for action to form the basis for designing the strategic
interventions required to implement the housing delivery.