CHAPTER ONE

1. INTRODUCTION

1.1   BACKGROUND OF STUDY

Housing goes beyond mere shelter to include the facilities and other things in the environment that makes living comfortable for man, hence Olujimi (2008) opine that for housing to produce these impacts, it must be adequately provided with functional infrastructure. The concern of most Nigerian cities today, is the fluctuating housing rental and the complete neglect of basic infrastructure by government and its agencies that are expected to provide these infrastructures and maintain the few available ones. This study therefore examined the rental housing affordability

Housing Affordability can be defined as being capable to bear the housing cost or costs without acquiring severe consequences (Noppen, 2014). Housing affordability is subjective implying that what is affordable to one person may not be affordable to another. In previous research, various metrics have been used to measure home affordability key among them being the prices of homes, individuals’ disposable income, mortgage loan interest rates, housing price index amongst others.

Demand of housing by prospective homeowners and supply of housing by real estate developers and other institutions plays a critical role in determining the actual pricing of homes. If demand exceeds supply, home prices will be higher and vice versa. Increases in prices of homes that are not in tandem with increases in income will negatively affect home affordability in a significant way (Trimbath & Montoya, 2002). In this study, access to affordable housing is being defined as the capacity to own a dwelling place at the prevailing market price that is easily affordable.

Two other aspects of affordability will now be mentioned briefly. First, affordability analysis can be applied specifically to the cost of accessing housing that is, meeting additional entry costs (Yates, 2007; Wood and Bushe-Jones, 2011; King, 2014). Measures of accessibility can complement measures of ongoing affordability, by providing an indicator of financial thresholds for households to enter a segment of the housing market. Tenure is an important variable in differentiating access costs. They are usually more significant for first home buyers who generally have to provide an equity deposit and meet one-off transaction charges and taxes associated with arranging mortgage finance. Karmenl (2008) A standard approach to measuring access costs for home buyers considers the borrowing capacity of a typical household (or income group) under prevailing finance conditions and compares this to the price of obtaining housing suitable to their needs.

1.2   STATEMENT OF THE PROBLEM

Despite its obvious overlook, housing can be defined as a physiological need in almost the same class as the basic needs. In most urban areas the following might be the problems accompanying let houses affordability; population increase, high rent costs, rented house inconveniences and creation of debilitating comfort zones giving rise to elevated desires and wants to own a home. However, these desires are often met by constraints such as high building expenses, high land costs, lofty building materials costs, water supply access, electricity access, poor regulatory frameworks, conditionality, high interest rates for shelter finance, limited access to house finance among others. Finally, several researches has been carried out on housing affordability but not even a single research has been carried out on the study of rental housing affordability among tenants in Ilaro.

1.3   AIMS AND OBJECTIVES OF STUDY

The main objective of the study is to examine rental housing affordability among tenants. Other specific objectives of the study include;

1. to determine the factors affecting rental housing affordability among tenants.
2. to determine the determinant of housing affordability among tenants.
3. to determine the relationship between affordable housing and determining factors of affordable housing.
4. to determine the disposable income in relation to housing affordability.
5. to proffer possible solution to the problems.

1.4   RESEARCH QUESTIONS

1. What are the factors affecting rental housing affordability among tenants?
2. What is the determinant of housing affordability among tenants?
3. What is the relationship between affordable housing and determining factors of affordable housing?
4. What is the disposable income in relation to housing affordability?
5. What is the possible solution to the problems?

1.5   STATEMENT OF RESEARCH HYPOTHESIS

H0:    Rental housing affordability is not dependent on tenants’ income.

H1:         Rental housing affordability is dependent on tenants’ income.

1.6   SIGNIFICANCE OF STUDY

The study of rental housing affordability among tenants will be of immense benefit to the entire Ilaro community in the sense that it will enable the government at all level should provide favourable investment climate infrastructures and mortgage insurance to low and middle income earners. The study will also enable the national road and research institute do a lot off research into cheap and effective materials for housing. Architects will also through the study concentrate on cost effective and functional design instead of overdesigning of a house which might lead to cost effectiveness of the house, but if they check the overdesigning it could reduce the cost of house leasing knowing too well that all fingers are not equal.

1.7   SCOPE OF THE STUDY

The study of rental housing affordability is limited to Ilaro.

1.8   LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9   DEFINITION OF TERMS

Rental     An arrangement to rent something for a period of time, or the act of renting something

Housing  Living spaces, refers to the construction and assigned usage of houses or buildings collectively, for the purpose of sheltering people —the planning or provision delivered by an authority

Affordability   The extent to which something is affordable, as measured by its cost relative to the amount that the purchaser is able to pay.

Tenants   A person who occupies land or property rented from a landlord.