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Housing affordability is an issue at the centre of housing policy debates. The conventional housing affordability models that deal with access to homeownership are based on the housing market practices prevalent in the Western countries where homes are usually purchased with formal mortgages. These measures are not suitable for markets in developing countries like Nigeria where homes are usually built incrementally with informal financing. The study built a housing affordability model for measuring access to homeownership by the incremental building process practiced in Nigeria with focus on Kaduna State. Data was collected through a cross-sectional questionnaire survey of 450 households selected through the stratified random sampling. The binary logistic equation and its diagnostics were used to build the housing affordability model. The one-way ANOVA and the two-sample t-test were also used to analyse the data. The results indicated that household income, savings, and education are determinants of housing affordability with positive impact. Conversely, household size, current housing expenditures, non-housing expenditures, cost of land, and building cost relative to income are determinants of affordability with negative impact. Geographical difference in housing affordability in the state is not significant. However, significant affordability differences exist across household income distribution and educational levels of household heads, and between households that own residential land and those that do not. Policy that empowers households to make greater savings will be the most effective in improving housing affordability. The study concluded that households’ housing affordability is shaped by household finance and demography, housing costs and costs of household necessities and that the solutions to housing affordability problems are located within and outside the housing sector. An integration of measures that support household savings and wealth creation, ease access to residential land, and bring down urban house rents and costs of household necessities is necessary to improve urban housing affordability.


Housing affordability is a central issue in the contemporary housing policy debates. It is an important subject in both academic and policy research. It is one of the topics that have dominated housing discussions in the past three decades. In fact, the question of housing affordability is one housing issue that has attracted global concerns, generating discourse at national and international levels across countries, both developed and developing. The importance of housing affordability in human settlement cannot be over-emphasised. This thesis presents the outcomes of a research on housing affordability in Nigeria, focusing particularly on the affordability of accessing homeownership. This chapter presents the introductory aspects of the work.

1.1 Background to the Study

In recent times, the growing urban population and the poor housing conditions of the vast majority of urban dwellers in developing countries have become an important issue in global discourse. Many of these countries are experiencing severe pressure on urban housing as a result of mismatch between their housing provisions and urbanisation trends. In many countries in Africa, rapid urbanisation and rising urban housing costs coupled with high rate of urban poverty, weak governance, and inefficient public services have continued to aggravate the situation. Africa’s annual urban population growth rate of 3.23 percent in 2011 (United Nations, Department of Economic and Social Affairs, Population Division, 2012a), makes it the fastest urbanising continent in the world. Demographic growth has continued against a considerable and constantly increasing housing deficit (UN-Habitat, 2010).

Thus, housing shortages, poor housing qualities, slums, and squatter settlements are commonplace.
Housing is an important social and economic good. It is both an investment and consumption good, and indeed an essential commodity. Its importance cannot be over-emphasised. It is a tangible asset that provides established property rights to its owner and for which there is a ‘deep’ secondary market (Berry, 2000). The significance of housing goes beyond household levels to national economies. Housing has a vital role in the transmission of monetary policy, business cycle and the health of the financial system (Ellis, 2011).
Housing as a consumption good is a basic human need. It is fundamental to family well-being, harmony and stability. It exerts much impact on welfare and standard of living and so, it is an issue of public concern. Accordingly, it is subject to public policy, prompting governments to take various policy measures, which could focus on the rented or the owner-occupier sectors of the housing market, to meet expanding urban housing needs.

However, the literature indicates that homeownership provides many benefits to both households and communities such as preferred environment for decent life, means of asset acquisition for modest income families, stability and financial security to families and higher level of control over housing and lives (Collins, 2004; Hulse, Burke, Ralston, & W. Stone, 2010; Recsei, 2010). Homeownership offers in addition to a dwelling place, a greater sense of ease, affluence, and wellbeing (National Housing and Planning Advice Unit [NHPAU], 2007).
Perhaps due to these benefits, there are strong aspirations for homeownership across countries including Nigeria where most people hope for the day they will have their own houses (United Nations Centre for Human Settlements [UNCHS], 1993) and the UK (Barker, 2004; NHPAU, 2007). In the US where homeownership is an important symbol of personal economic achievement (Rosenthal, 2001), it is termed the “American dream” (Bostic, Calem, & Wachter, 2004). In Singapore, it is “the Singapore dream” (Ong, 2000), and in Australia it has evolved in three distinct phases from an aspiration of households to a driver of inequality and then as a fading dream (Yates, 2007b).
It is therefore no wonder that there are policies that support the growth of homeownership and give it preference as a housing tenure in many countries. Such policies are prevalent and take diverse forms in different countries (Phang, 2009). For instance, Nigeria’s public housing policies and programmes in the past four decades have centred mostly on homeownership.

As the National Housing Policy, 2012 stated, the main thrust of the government housing policy goal is to vigorously pursue measures to make increasing majority of Nigerians homeowners. Several other countries including Australia (Burke, et al., 2007, Johnson, 2008), Taiwan (Chen, 2011), the United Kingdom (House of Commons, 2006), the United States (Barreto, Marks, & Woods, 2007), and Singapore (Ong, 2000) have such policies.
However, despite these policy supports, studies have demonstrated that access to homeownership is constrained, sometimes severely, by affordability problems in several countries such as Nigeria (Onyike, 2007), the UK (Barker, 2004), Australia (Australian Housing and Urban Research Institute [AHURI], 2003) and New Zealand (Hargreaves, 2003a).

Nigeria’s Housing Finance Programme stated that most people would like to own their homes but there were unfortunately far too many obstacles suppressing the achievement of the dream. Similarly, Burke, et al (2007) found that the likelihood of the lower-income renters in Australia moving into homeownership declines with the deepening of the affordability constraints, and that many renting households were as a result permanently locked out of homeownership.

Furthermore, research findings in Italy demonstrated that tenure change from renting to owning is strongly dependent on the affordability situations of households (Bravi, et al, 2008). Also, research results in Germany confirmed the importance of affordability as a determinant of homeownership rate (Bentzien, Rottke, & Zietz, 2012). Thus, affordability constraints have been a major cause of gap between aspirations for homeownership and its actualisation.
Indeed, affordability has been one of the issues at the core of urban housing problems. Households make their housing choices based on what they need, what they want and perhaps most importantly, what they can afford. In other words, a household’s housing need and any need for that matter can only be met to the extent of the household’s ability to afford it. Therefore, for the analysis of housing need to be useful it has to also address the issue of affordability for households (Whitehead, 1991) because the demand for market housing is in the final analysis determined by the ability of households to pay for housing rather than their need (Whitehead, Monk, Clark, Holmans, & Makkannen, 2009).

In recognition of this, public housing policies go beyond dealing with housing needs to the important question of housing affordability, aiming at providing decent housing for the people at affordable costs. In fact, affordability is one of the seven components of the right to adequate housing under international human rights law contained in United Nations General Comments No 4, 1991 (University of Minnesota, 2003). It is a key policy concern in any measure to meet housing need or solve housing problems.
Consequently, housing affordability has in the past three decades been in the front burner of housing policy debates due to the growing concerns over rising urban population, declining urban housing conditions, rising real house prices, expansion of urban slums and squatter settlements, and worsening households’ housing affordability across countries (Aribigbola, 2011; Bramley, 1994; Burke, et al, 2007; Burke, Ralston, & Stone, 2010; Hancock, 1993; Ndubueze, 2007; Stone, 1993, 2006a; Whitehead, 1991).

The UNCHS in 1993 asserted that affordability is one of the most difficult issues in housing delivery particularly in developing countries. Likewise, Cox and Pavletich (2012) stated that because housing represents the largest share of household budgets, housing affordability is a major determinant of both the cost of living and the standard of living. Thus, measuring housing affordability has become an important area in housing studies and as a guide for housing policy response it is a fast growing practice.
Nigeria, a Sub-Saharan African country presents a typical case of a country beset with urban housing problems. The International Monetary Fund [IMF] (2007) reported that the country’s urbanisation rate of 5.3% was one of the fastest in the world. This rapid urbanisation has increasingly complicated and worsened environmental and human settlement problems (Alkali, 2005). These problems manifest in severe urban housing shortages and high building costs with attendant overcrowding, poor environmental conditions, widespread slums and shantytowns, high rents, and low infrastructure services, (Ajanlekoko, 2001; Ajoku & Nubi, 2009).
The country’s Report of the Vision 2020 National Technical Working Group on Housing (Federal Government of Nigeria [FGN], 2009a) described the country’s housing conditions as poor by any yardstick. Also, the Nigerian Housing Finance Programme put the cumulative housing deficit in 2014 at about 17 million units. As UNCHS (1993, p46) aptly put it, “housing remains one of Nigeria’s most intractable problems”. In particular, housing urban Nigerians has continued to be a great challenge to which successive governments have failed to find an appropriate response.

In the past four decades, the governments have implemented a number of housing programmes to address the lingering problem but housing problems have worsened over the years. Moreover, the country’s current housing reform is based on the market enablement approach, a private sector-driven pro-market system of housing provision in which the government role is that of an enabler. This housing reform approach has made the question of affordability a critical issue in housing policy debates.
A good understanding of local situations is important for policy formulation, as policies should reflect the interests of the would-be beneficiaries. Since affordability is a critical factor and indeed a binding constraint in households’ bid to access housing, it is important to measure housing affordability in order to ascertain the housing affordability status of households. It is also necessary to establish the variables which determine households’ housing affordability outcomes to enable the design of policy measures to tackle housing affordability problems and improve the housing affordability situations of households.

These steps are indeed essential to guide housing policy response. Moreover, since homeownership provides many benefits to households and communities, is an aspiration of most Nigerians, a preferred housing tenure, and has indeed been the focus of Nigeria’s housing policies and programmes, it is more beneficial to focus the housing affordability study on homeownership. A study on urban housing affordability in Nigeria in this regard is therefore essential to guide housing policy reforms. A growing number of studies have measured housing affordability at micro and macro levels across different geographical areas, household groups and housing tenures and at varying time frames using different methods and models (Bramley, 2012; Brounen, Neuteboom & Dijkhuzen, 2006; Fisher, Pollakowski, & Zabel, 2009; Heylen & Haffner, 2010; Kutty, 2005; Ndubueze, 2009; Stone, 2006b; Yang & Shen, 2008; Yao, 2011; Yates & Gabriel, 2006).
Moreover, studies have established that several variables determine housing affordability outcomes in general and homeownership affordability situations in particular. These include household income, housing costs, demographics, mortgage interest rates, and interaction between these variables (Caplin, et al, 2007; Kutty, 2005; Yates, et al, 2007). Whitehead and Williams (2011) stated that rising wealth and increasing incomes support the realisation of housing aspirations and underpin the growth and stability of homeownership. Similarly, a study in Beijing, China found income to be an important determinant of affordability of access to homeownership (Yang & Shen, 2008).
However, the overwhelming majority of available housing affordability studies have focused on housing markets in the more advanced economies of the West. With respect to accessing homeownership in these countries, housing markets operate essentially on formal housing finance in which households generally buy their homes with formal mortgages. In measuring housing affordability, these studies expectedly apply models that reflect the practices in these housing markets. However, housing affordability measurements using models based on these housing market practices are not appropriate to housing markets in a developing country like Nigeria because the usual process of accessing homeownership is different from the practice in the Western countries.
In Nigeria, and some other developing countries, as against home purchase with mortgage, households usually build their homes gradually over a period with informal finance, primarily household incomes and savings. Because the vast majority of housing affordability studies has focused on the advanced economies of the West, the bulk of affordability measurement models are rooted in the housing market practices of these countries, and the determinants of housing affordability are generally conceived and analysed in the context of these markets’ practices.

These affordability measures such as the house price-to-income ratio, PIR, the mortgage-to-income ratio, MIR, and the various housing affordability indexes say nothing about affordability to households that have to build their homes themselves over a period with their own funds. Notwithstanding, the conventional housing affordability models are applied to measure affordability in Nigeria’s markets essentially because existing housing affordability studies have not deeply explored this area so as to provide more suitable models. Accordingly, there is currently no housing affordability model specifically designed to measure affordability within the context of the prevalent housing market practice in Nigeria, a situation that leaves an important gap in knowledge.
For any housing affordability study to be of practical and policy significance to any market, it has to reflect the local housing market practice. Therefore, studies measuring affordability of access to homeownership should have regard to the context in which households usually gain access to homeownership in the local housing market. Since the conventional housing affordability models are rooted in housing market practices that rarely obtain in the Nigerian environment, their application cannot provide the true empirical picture of affordability that will elicit apposite housing policy response. Thus, to support housing policy reforms that are relevant to the needs of the Nigerian people, measurement of housing affordability has to be in the context of the local housing market practice in which households purchase land and finance the construction of their homes over a period while they reside in rented homes.

Moreover, effective handling of housing affordability issues necessitates that the determinants of affordability be empirically established also in the context of the prevalent local housing market practices. Existing housing affordability studies in Nigeria have not investigated these areas, which again leaves important knowledge gaps.
The essence of this study was to fill these gaps in the housing affordability literature. Thus, fulfilling this need to provide a fuller and more appropriate reflection of the concept of housing affordability in the Nigerian urban housing market context provided the primary motivation for this work. The study built a housing affordability model for measuring the affordability of access to homeownership in the context of owner-financed incremental housing construction practiced in urban Nigeria. It also established the variables that determine households’ housing affordability outcomes within the same context and employed the model to measure housing affordability across different household groupings in the study area. It is expected that the results will provide a framework for housing policy reforms and particularly, for problem-solving on housing affordability in Nigeria.


1.2 Statement of the Research Problem

Nigeria has been experiencing rapid urbanisation for more than five decades. The United Nations World Urbanisation Prospects, 2011 Revision (United Nations, Department of Economic and Social Affairs, Population Division, 2012a) showed that at independence in 1960, the country had an urban population of about 7,422,000 representing a proportion of 16.2 percent of the total, and half a century later in 2010, its urban population had grown over ten times to about 78,629,000 or 49 percent of the total. The situation has resulted in growing urban housing need. However, urban housing provision has not matched the rate of urbanisation, giving rise to severe pressure on housing and widening housing deficit.
Consequently, the country faces acute urban housing problems, which manifest in many different ways such as housing shortages, poor housing conditions, rising difficulty in accessing housing by households and proliferation of slums and squatter settlements. In the past four decades, Nigeria’s central government has embarked on various housing programmes most of which have focused on homeownership in attempt to solve the country’s nagging urban housing problems. Despite these efforts, however, the urban housing condition has continued to worsen. In fact, several studies have scored these programmes very low (Lawal, 1997; Nwaka, 2005, Ndubueze, 2009; Ogu, 1999; Ikejiofo, 1999). Affordability of housing for urban households has become increasingly difficult.
Effectively dealing with urban housing problems demands that suitable housing is not only available but also affordable to those for whom it is provided. However, rising housing costs amid expanding urban population and relatively low incomes have continued to make access to decent and affordable housing (which has been a key objective of Nigeria’s housing policies) elusive to the majority of urban households. But housing affordability problems are not limited to Nigeria.

Across countries, rising real housing prices, declining urban housing conditions, and declining ability of urban households to afford adequate and suitable housing, have been such a concern that housing affordability has become a central issue in housing policy debates. Consequently, measuring housing affordability has increasingly become an important area in housing studies and a necessary element in the formulation of housing policies and programmes.
In order to have policy response with appropriate intervention programme to achieve Nigeria’s housing policy goals, a deeper understanding of housing affordability situations of households is essential. However, the body of literature on the subject of housing affordability focused on Nigeria, and particularly with respect to homeownership is scanty. In particular, it is important to have empirical knowledge of the housing affordability situations of households and the determinants of affordability.

As government housing policies and programmes have focused mostly on access to homeownership in urban areas and homeownership is the dream of most Nigerians, it is more useful to focus housing affordability investigations on urban homeownership. This will provide a framework for problem-solving in housing affordability and empirical support for housing policy reforms. However, if such policy reforms would reflect the interest of the people for whom they are made, as is fundamental in policy formulations, then the investigation has to be tailored to the context of Nigeria’s usual housing market practices.
Existing housing affordability studies that measured the affordability of access to homeownership in Nigeria (Charterjee, 1982; Onyike, 2007) based their analysis on the housing market practices of the advanced countries of the West in which households acquire their homes primarily through purchase with formal mortgage financing. Housing affordability models employed to measure homeownership affordability are generally constructed based on these market practices and the determinants of affordability are analysed and established on the same basis. Such models are therefore suitable only to housing markets in which home purchase with mortgage is the prevalent means of access to homeownership by households.
In Nigeria, access to homeownership is predominantly through an incremental building process normally realised by households with informal finance, primarily household incomes and savings. To enter homeownership, urban households generally acquire land by purchase from private landholders at market prices and progressively build their homes to completion over a period. During the period of house-building they reside in rented homes.

The conventional housing affordability models are not suitable for such housing markets because they do not explain the affordability situations of the majority of households in these markets. The application of the conventional affordability models to these markets at best produces speculative results and does not provide the true empirical picture of affordability that will draw appropriate housing policy response. Moreover, the housing affordability literature has not deeply explored the question of measuring housing affordability within the context of the usual practice in these markets to provide suitable housing affordability models.
Thus, the important question of how to measure housing affordability appropriately within the context of Nigeria’s prevalent housing market practice of accessing homeownership, which will enable housing policy reforms to respond more effectively to local housing affordability realities, is a problem that the literature has hitherto not adequately addressed. It is therefore an important knowledge gap which needs to be filled. Allied to this problem are the questions of determining the housing affordability outcomes of households with respect to access to homeownership and establishing the variables that influence affordability within the context of this housing system.

These also are important knowledge gaps in the literature that have to be filled. It is therefore necessary to develop a housing affordability model appropriate to Nigeria’s prevalent local housing market practice of accessing homeownership and indeed to ascertain the determinants of housing affordability and measure housing affordability of households in some sections of the market with the model. Getting these done informed the undertaking of this research.

1.3 Aim of the Study

The aim of the study was to build a housing affordability model for measuring the affordability of access to homeownership in the context of owner-financed incremental housing construction practiced in Nigeria with a view to engendering more responsive housing policy reforms.

1.4 Objectives of the Study

The objectives of the study were to:
1. Ascertain the variables that determine housing affordability in Kaduna State of Nigeria;
2. Determine the levels of households’ housing affordability in the senatorial districts of Kaduna State;
3. Ascertain housing affordability outcomes in Kaduna State across household income distribution;
4. Establish households’ housing affordability outcomes in the study area based on educational level attainment of household heads;
5. Determine the levels of housing affordability in the study area based on households’ land ownership status.

1.5 Research Questions


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