Housing Economics and Management

• Course Outlines
• Aims and objectives of housing policies and programmes in Nigeria.
• Priorities of urban and rural housing.
• Housing as a factor of investment and integral part of national
plans in Nigeria.
• Assessment of housing needs and demands.
• Housing market analysis and related studies.
• Housing finance.
• Planning and design criteria for housing norms and standards,
economic, social, cultural and technological parameters of housing.
 Housing Economics and Management

• Course Outlines
housing densities, locations and layouts, services
and community facilities, appraisal of existing
housing options in Nigeria. Private housing,
co-operative housing, and public housing.
Housing forms.
Existing controlling measures and their efficacy.
 Housing Economics and Management

• Course Outlines
The concept of flexible controls and community
guidance.
Spontaneous and squatter housing in Nigeria
Experiences in housing in selected developing
countries.
Appraisal of official housing programme in
Nigeria.
 Aims and objectives of housing policies and
programmes in Nigeria
• Housing
One of the basic needs of man, a multi-
dimensional bundle of services. According to UN
“ the residential neighbourhood, micro-district or
physical structure(s) that mankind uses for
shelter and the environment of the structure,
including all necessary facilities, equipment and
devices needed for the physical health and of the
social well-being of the family and individual’.
 Aims and objectives of housing policies and
programmes in Nigeria
• Housing.
According to Bourne(1981), housing is a physical
facility, unit or structure, which provides shelter to its
occupants and as an economic commodity; and a
component of fixed capital stock/a means of
producing wealth.
It also means the process of providing a house for
someone to live in, with respect to its community,
the physical setting and facilities, which enhances
occupants’ socio-cultural and economic interactions.
 Aims and objectives of housing policies and
programmes in Nigeria
• Housing.
It is therefore an indispensable social and physical infrastructure
whose quality and quantity serve as an instrument for measuring
the standard of living, the level of technological advancement,
culture and civilization of a nation.
Good housing is essential for human dignity and self-fulfillment. It
provides a physical framework in which human, social, economic
and cultural
Resources are realized,enriched and integrated.
Housing development is an important economic activity
That provides direct employment opportunities with multiplier effect
on the building industries.
 Aims and objectives of housing policies and
programmes in Nigeria
• Housing Policies
A policy is a plan of action, a statement of aim
and ideals. A housing policy is thus a guideline
provided by the government aimed at meeting
the housing need and demand of the people
through a set of appropriate strategies
including fiscal, institutional, legal and
regulatory frameworks(Agbola,1998)
 Housing Policies
• Essentials for Good housing policies.
Duruzoechi(1999); must be consistent with sound macro-
economic policies.
Must be shaped according to the capabilities or the likes
of consumers in time and space.
Must complement and strengthen the private sector’s
involvement in housing development.
The policy must be stable and secure within the period of
maturity. Any subsidies must be targeted at the right
and necessary recipients.
 Housing Policies
• Problems of past housing policies in Nigeria.
Loan schemes did not adequately cater for the needs of the
low income group.
Machinery for implementation of housing programmes was
inefficient.
The conception of housing need was narrow.
Rural housing problems were neglected.
Policies and programmes were introduced without adequate
knowledge of the nature, scope and dimensions of the
respective housing problems in urban and rural areas.
 Housing Programmes
Definition: These are the different types of
implementable projects in the housing sector
derived from housing policies to meet the
goals earlier specified. The Shelter-Afrique
Housing Estate is an example of PPP in the
provision of housing in AKS.
 Priorities of Urban and Rural Housing
• Urban Housing – Housing problems arise as a
result of rapid growth in Urban populations
caused by increased rural-urban migration. Urban
centres have become indicators of better living
conditions hence increased migration of young
people who do not have the level of income
required to meet the social requirements of urban
living. There is therefore the need for increased
quantity of housing units in urban areas.
 Priorities of Urban and Rural Housing
• Urban Housing - Increased Crude Oil Production
with a reflection on the socio-economic
prosperity especially in urban areas-rural-urban
drift and pressure on housing in urban centres.
• Indicators – high occupancy ratios ranging from 2
to 3 persons/room in medium sized town such as
Calabar, Owerri, Aba, Onitsha, Warri. 5.2
persons/room in Lagos showing over crowding.
 Priorities of Urban and Rural Housing
• Urban Housing –Inadequate housing facilities:
• - energy facilities
• - portable water
• - no good sanitary facilities
• - no private and public toilets.
• Inefficient and inadequate solid waste disposal facilities.
• Provision of more dwelling units and improvement in
the quality of housing facilities in all urban centres in
Nigeria.
 Priorities of Urban and Rural Housing
• Rural Housing – The main problems of rural housing include:
• poor quality of houses.
• High cost of non-local materials
• Non-availability of modern builders/mansions and
craftsmen.
• Building technology is local, simple and unspecialized. Lack
of basic infrastructure.
• Substandard or total lack of dwelling facilities (toilet, kitchen,
in-house bathroom, potable tap water and electricity).
 Priorities of Urban and Rural Housing
• Rural Housing – Non-adherence to physical
planning regulations. Mud-walls do not last
and are susceptible to variations in weather
conditions.
• Thatch roofs require frequent replacement.
• The main dimension of rural housing problems
is qualitative. Requires improvement in quality
of building materials and housing facilities.
 Industrial Development Planning
• Course Outline: Factors affecting the location
of industry. Assessment of land for industrial
land use. Design standards for industrial land
use. Management principles for industrial land
use.
Housing as a factor of investment and integral
part of national plans in Nigeria
• A significant feature of housing is that it represents a
substantial capital accumulation- a stored-up capital.
The smallest unit of housing represents a high capital
tied down. With a vibrant mortgage system, this
capital can be converted for investment and
development purposes. It can be used to re-vitalize
an ailing economy with a very efficient mortgage
system. An investor who needs capital and has some
flats of housing may decide to mortgage the flats-
convert the tied capital to raise the needed money
•
•
Housing as a factor of Investment and Integral
Part of National Plans in Nigeria
• Capital. He might propose a long lease to his
tenant to raise the money. These options will
lead to releasing the stored-up capital directly
through a conversion process of mortgage
system.
• Because of the huge capital stored-up in
housing development, a substantial part of
national investment potential is consumed by
the housing sector. A national development
Housing as a factor of investment and Integral Part of National Plans in Nigeria

• Plan will therefore be deficient as the sector

attracts national capital both directly and
indirectly.
•
Assessment of Housing Needs and Demands

Housing Needs- Is an expression of human desire for

decent and affordable accommodation .The
quantity of housing that is required to provide
accommodation of an agreed minimum standard
for a population of a given size; household
composition and age distribution (Robinson 1979).
Housing need is the extent to which the quantity
and quality of existing housing falls short of that
which is required to provide each household or
persons in the
 Assessment of Housing Needs and Demands

population, irrespective of their ability to pay or

particular personal preferences with
accommodation of a specified standard.
Housing need may be expressed
- inadequate privacy
- space
- materials and services.
Indices for evaluation of human need for housing
include: affordability, cost-recovery, adequacy,
Assessment of Housing Needs and Demands

Suitability and vacancy rates.

The Housing Delivery System -
A combination of many interrelated process
affected by exogenous and endogenous
variables.
- The system that allocates housing to
households in a given country irrespective of
class and location.
- Production of new houses
Assessment of Housing Needs and Demands

• Renovation of existing ones

• Distribution of new and old house to all
consumers
• The delivery system
• Production mechanisms
• Regulatory and administrative devices
components include: land and infrastructure,
construction technology labour and management
building materials housing
Assessment of Housing Needs and Demands

finance distribution methods and monitoring and

evaluation.
Housing Demand
Housing demand refers to the type and cost
of housing a person or a household is able and
willing to pay for. Housing demand is
influenced by income, price(s), rents, credit
availability, wealth and demographic factors
such as household composition and
Assessment of Housing Needs and Demands

distribution in term of age/sex/size.

These parameters determine type of design
and structures suitable for private prospective
owner(s) or users of the shelter or house.
These are reduced to space/form
manipulations locations, quantity and quality,
material choices and construction methods.
Housing Market Analysis and Related Studies

Housing is heterogeneous and durable

dwellings differ in size, age, design and location.
Movement from one place to the other is very
costly.
Filtering Model- Explains the movement from
lower quality to a higher quality.
Housing is heterogeneous with each dwelling
offering a different bundle of housing services-
size, layout, style, utilities(heating
Housing Market Analysis and Related Studies

and electricity).
The quality of interior and the
outside(exterior) when someone chooses a
house or an apartment, you also a
heighbourhood with its own bundle of housing
services. These neighbourhoods differ in
accessibility to jobs and social amenities, local
public goods and taxes and environmental
quality.
Housing Market Analysis and Related Studies

Determination of Equilibrium Price of a Dwelling

The Hedonic Approach- Based price + determined

rates for additional facilities. Rates for other
facilities maybe positive or negative.

1. Access price was determined (-ive) based on

increasing distance from city centre.
Housing Market Analysis and Related Studies

2. Size- tive based on every additional room.

3. Roof- -ive based on number of years.
4. Schools- increases based on the quality of
schools in the neigbhourhood.
Households choose dwellings based on
information on location, size, and design
features.
Durability, determination and Maintenance Over
a period of time= 50years- housing
Hosing Market Analysis and Related Studies

quality deteriorates depending on maintenance

in the form of renovation or remodelling.
Residences can therefore be categorised based
on their current quality using level of
maintenance when quality changes, there are
three possible scenarios :
1. Boarding up: A dwelling can be boarded up
or taken off the market temporarily for
maintenance.
Housing Market Analysis and Related Studies

2. Conversion: A dwelling can be converted to

non-resident use.
3. Abandonment: The owner may abandon the
dwelling if it cannot be converted or maintained
at an optimum cost.
Durability and Supply Elasticity An
increase in the price of housing increases the
quantity supplied in three ways:
1. Build more new dwellings.
Housing Market Analysis and Related Studies

2. Increase maintenance on used dwellings.

3. Upgrade used dwellings.
This happens because of higher price being
paid.
Filtering Model of the Housing Market
The model shows how a dwelling changes
over time in quality and in the income of its
occupants. It has two basic features:
Housing Market Analysis and Related Studies

1. Decrease in quality: Quality of services

generated by a dwelling decreases over time
because of physical deterioration,
technological obsolescence and changes in
housing fashion.
2. Decrease in occupants income: Occupied by
households with progressively lower incomes.
 Co-operative Housing
Housing co-operatives are defined as societies
established purely for the purpose of providing
accommodation and other related services to their
members. Houses are built for members in turn by
the society until the last member has benefitted
from the exercise. The co-operative provides other
housing services such as security, portable water,
electricity, free labour, materials and food. It is an
organisation of mutual assistance in house ventures
for and by its members.
 Co-operative Housing
Forms: 1) Co-operative Association – Co-operate
owning of houses. Members participate freely
in the design and initial decision with regard to
construction and employment of services of
qualified professionals.
2. Self- built- Housing Association- A
group of people co-operatively using their
labour and skills to build houses.
Objective and Organisation of Housing
 Co-operative Housing
Co-operatives:
- Construction or obtaining houses at
reasonable cost.
- Receive secure land tenure.
- Live in a peaceful neighbourhood through
provision of street lights, fencing etc.
- Obtain clear water and good roads.
Housing Co-operatives differ significantly in
 Co-operative Housing
1. The identity of producers and consumers-
only housing.
2. They require long-term planning, financing
and organisation in costs and life-span of
houses.
3. Depend on collaboration with government.
4. Enhanced human relationships.
Advantages
 Co-operative Housing
1. Personal involvement and satisfaction in the
provision of fundamental human need.
2. Provide members with greater sense of
neighbourliness
3. Unites tenants and landlords for maintenance
problems.
4. Bulk purchase of materials reduces cost of
individual building projects.
 Co-operative Housing
5. More effective maintenance approach.
Problems
1. Inadequate education/orientation on co-
operatives could lead to misunderstanding
and in-fighting.
2. The challenge of inflation renders such
co-operation inefficient.
 Mortgage Financing
Originally, provision of housing was a
collective communal responsibility.
Urbanisation, industrialization and
colonialism caused a change to individualism,
selfishness and self-preservation. During the
3rd National Development Plan in Nigeria(1975-
1980). The FGN proposed to build 202,000
housing units all over the country. Only 24,000
housing was realised.
 Mortgage Financing
_ most satisfactory housing_ those provided by
personal equity or partly subsidized by
employers through mortgage financing.
1999_ FGN introduces a house policy emphasising
private sector participation in housing delivery.
_ encourage and promote active participation of
all tiers of government in housing delivery.
_ strengthen institutions within the system to
 Mortgage Financing
respond to housing demand.
_ emphasise housing investment to meet housing
needs.
_ encourage private sector in housing development.
Mortgage Finance
A mortgage creates a debt and requires a pledge
of property to secure it. The mortgage document
admits the debt and contains an
 Mortgage Financing
agreement to repay it in accordance with specified
conditions.
Types of Mortgage
1. Legal Mortgage:- A deed of conveyance in
legal interest by the mortgagor in security for the
repayment of a loan plus the interest.
2. Equitable Mortgage:- Involves the deposition
of title document to a mortgage by the
mortgagor whether written or not written.
 Mortgage Financing
A deed of mortgage is also prepared to assure that
the interest to the loan is paid by the mortgagor.
The Nigerian Mortgage Finance Industry
_ a sub-sector of the entire financial system.
_ evolve from the British system
_ operated by two broad sectors.
_ Federal Mortgage Bank of Nigeria(regulatory
system)
 Mortgage Financing
_ Primary Mortgage Institutions_ performing
retailing functions.
_ Decree of 3 of 1992 _ National Housing Fund
_ to serve as a pool of funds to sustain the PMIs
at creating mortgage.
Principal Contributors
_ Nigerians working in private and public sectors
_ Commercial and Merchant Banks
 Mortgage Financing
_ Insurance companies
_ Federal Government of Nigeria
Roles of Primary Mortgage Institutions
1. Grant loans to an individual for the
purchase or construction of a dwelling house.
2. Grant loan and advance to any person for
the improvement of dwelling house.
3. Accepts savings and deposits from the
 Mortgage Financing
public and pays interest there-on.
Problems of Mortgage Finance in Nigeria
_ Low interest rate on NHF
_ Low level of participation in the NHF
_ Macro-economic environment: high inflation
rate- structural bottle necks hinders
contribution to the fund.
_ Non- vibrancy of some PMIs
 Mortgage Financing
_ Cumbersome legal regulatory framework for
land acquisition.
_ Poor management
_ The structure of bank deposit liabilities
_ Resources for low-income housing
_ Capital to prosecute long-term lending.
 Public Housing
Various ways by which the governments
provide housing for the urban poor. In
developed countries, the processes of
government construction of houses for the
urban poor has been streamlined. This is
because there is effective control of
population growth and other sources of
population growth have effectively been
under control.
 Public Housing
Few third world countries have been able to
achieve this. They include Hong Kong and
Singapore. Other third world countries’
governments also invest in housing but also
face competition from other sectors.
 General Public Housing Policies
These can be classified into three broad
groups.(Drakakis-Smith, 1978)
• Reactionary
• Alien
• Indigenous
• Reactionary- Those responses concerned
simply with eradicating slums and squatter
settlements because they disfigure and
 General Public Housing Policies
disrupt that city. Other activities include
preventive measures to check migrants from
settling in urban areas. Demolition of existing
squatter settlements.
• Alien- This is a more sympathetic re-housing
approach. Here the governments’ housing
programmes apply standards that are alien to
the culture of the people. The housing
General Public Housing Policies
Schemes rely on capital-intensive,
technologically sophisticated industrial
methods of housing production. The products
are mainly high-rise blocks meant for low-
income poor groups in urban areas. The major
defects are cost and changes in ways of life.
The urban poor rejects these projects because
of increased journey to work, lack of
subsidiary informal jobs for family members
General Public Housing Policies
,etc. These blocks are then re-allocated to civil
servants or military personnel. Western
planning principles have characterised most
government responses to low-cost housing
needs. The main reason for this is the political
and economic relationship of most third world
countries to the West. Building regulations in
most third world countries are styled to suit
the materials produced in the West.
 General Public Housing Policies
• Failure of alien schemes has led to the
emergence of cheaper, more practical and
more satisfactory self-help approaches. The
self-help approach is based on the premise
that all non-conventional housing is a normal
response to housing shortages and indicates
the determination, effort and ability which the
urban poor invests in order to consolidate and
improve their life in the city.
General Public Housing Policies
Therefore to ensure that non-conventional
housing is eliminated, governments have
decided to aid the self-help programmes in
order to maintain the standard of housing
and the environment. Aided self-help housing
programmes have therefore been formalized
by governments in third world countries
specifying various technical inputs.
 General Public Housing Policies
• MAJOR PROBLEMS
• Administrative economics
• Inability of poorer tenants to pay monthly
rents
• Gradual re-allocation of plots to higher middle
income owners
 General Public Housing Policies
• CHALLENGES
• Development of policies involving less direct
participation by local authorities.
• More flexible building regulations cheap but
standardized construction materials cheap
approved housing plans.
 Private Housing
Constructed through normal institutional
channels and offered for sale or rent in the
open market. Most houses built by the private
sector are not for the urban poor. On the
other hand, lower income groups are
gradually accommodated as the private
housing ages. Private housing plays a minor
role in housing the urban poor because profits
on low-income housing are relatively small.
 Private Housing
However, the private sector contains far more
potential for low-cost housing construction
because of the method of construction
generally in use. One major problem is the
identification of the target population for
increased private-sector production. Since
profit margins on individual units are small,
increasing the number of units will attract
larger profit margins however the size of the
 Private Housing
target population depends on
• The price that households can afford to pay.
• The cost of production of each unit
• The profit margin allowed for each unit.
Most of these can be achieved through
government assistance.
 Squatter Settlements/Housing
Most familiar unconventional housing
constructed by the urban poor. They are very
visible elements of the urban landscape in the
third world. The visual impact of shanty
towns, with apparent chaos and squatter has
given rise to their descriptive technology.
 Squatter Settlements/Housing
The characteristics of squatter housing are;
• ‘uncontrolled’
• Temporary
‘temporariness’ is interpreted by planners and
administrators to suit their schemes. This gives
the authorities a considerable degree of direct
and indirect control over the inhabitants of
squatter settlements. No matter
 Squatter Settlements/Housing
how temporary or established a squatter
community maybe all are vulnerable to
legitimate demotion and clearance with
minimal warning and little compensation.
Sometimes the word spontaneous settlements
is used also to qualify squatters. However,
squatting has a legal connotation in all
countries. It refers to either the occupation of
land without the permission of the owner or
 Squatter Settlements/Housing
the erection of building and occupation in
contravention of existing legislation. This
defines the relationship between squatters
and the authorities. The squatting environs is
generally insecure and some dwellers are
induced to abnormal behaviours by the
insecure environment.
 Squatter Settlements/Housing
• Is extensive squatting a manifestation of weak
urban governance?
 Slums
Defined as legal, permanent dwellings which
have become substandard through age neglect
and/or sub-division into micro-occupational
units such as rooms, cubicles, etc. Slums are
legal. Lack of maintenance by landlords are the
primary reasons for slum development.
They are old substandard buildings left to
remain in urban space because of the difficulty
in increasing the stock of housing.