1.1 Introduction
Housing is universally acknowledged as one of the basic human needs, essential for security, comfort, and social stability. According to the United Nations Human Settlements Programme (UN-Habitat, 2020), housing is defined as more than just a physical structure that includes access to adequate shelter, security of tenure, and basic services necessary for healthy living. In every society, housing plays a critical role in shaping the quality of life and influencing economic development. The demand for housing is driven by factors such as population growth, urbanization, income levels, and government policies, while affordability relates to the ability of individuals or households to purchase or rent adequate housing without undue financial burden (Makinde, 2014).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
1.2 Background of Study
Housing is universally recognized as a vital component of human existence, contributing significantly to the well-being, health, and socio-economic stability of individuals and communities. According to the United Nations Human Settlements Programme (UN-Habitat, 2020), adequate housing is a cornerstone of sustainable development, promoting dignity and providing security for families. In the Nigerian context, housing has remained a critical socio-economic issue due to the persistent gap between demand and supply, coupled with challenges of affordability and accessibility.
The Federal Government's attempt to formalize housing finance began with the establishment of the Nigerian Building Society in 1956, a joint venture between the Commonwealth Development Corporation and private investors. Makinde (2014) reported that this institution laid the foundation for mortgage financing in Nigeria. However, its impact was limited, prompting the government to transform it into the Federal Mortgage Bank of Nigeria (FMBN) in 1977. The Federal Mortgage Bank of Nigeria was charged with mobilizing long-term funds for housing finance and operating as a secondary mortgage institution.
Akeju and Olanipekun (2014) asserted that housing in Nigeria faces multifaceted challenges, particularly in urban centers, where rapid population growth and rural-urban migration exert continuous pressure on the existing housing stock. They emphasized that the inability of the housing sector to match demand with supply has led to a significant deficit, making affordable housing a luxury for many citizens. Similarly, Makinde (2014) reported that the high cost of housing in Nigeria is aggravated by inflation, rising construction costs, and inadequate housing finance systems, creating a market where demand far outweighs supply.
The role of mortgage financing in bridging this housing gap has been a subject of national interest. The Federal Mortgage Bank of Nigeria (FMBN), established in 1977, was designed to provide affordable mortgage financing to Nigerians. Onyebueke and Hope (2011) affirmed that the FMBN serves as a critical institution in facilitating housing development, yet bureaucratic delays, stringent loan requirements, and limited funding capacity have hindered its effectiveness. They contended that despite the FMBN's efforts, many low- and middle-income Nigerians still struggle to access housing finance, thereby perpetuating the affordability crisis.
Olotuah and Bobadoye (2009) stated that the lack of government commitment to housing development and weak implementation of housing policies have contributed to Nigeria's widening housing deficit. They reported that most public housing schemes fail to reach the intended beneficiaries, resulting in the proliferation of informal settlements and slums (Olotuah and Bobadoye, 2009). On the other hand, reliable data on housing demand, affordability, and mortgage accessibility remain scarce. UN-Habitat (2020) affirmed that without evidence-based data, housing policies are often based on assumptions rather than actual demand metrics, reducing their effectiveness in addressing real housing needs.
Onyebueke and Hope (2011) stated that the creation of the National Housing Fund (NHF) in 1992, managed by the FMBN, was another significant milestone. The NHF aimed to provide affordable housing loans to Nigerians through mandatory contributions from workers. However, the effectiveness of this scheme was undermined by poor implementation, limited fund mobilization, and bottlenecks in loan disbursement. This study is set against the backdrop of providing a statistical analysis of housing demand and affordability in Nigeria, with a focus on the role of the Federal Mortgage Bank of Nigeria in addressing these challenges.
1.3 Statement of Problems
Investigation revealed that the increasing cost of land, building materials, and labor is also making home ownership difficult for a significant portion of the population. Consequently, the ability of the low- and middle-income earners to afford decent housing is shrinking, leading many to resort to substandard living conditions. Furthermore, the cumbersome processes associated with mortgage acquisition and the stringent conditions for loan approval are deterring potential homeowners from accessing financial assistance through the FMBN.
Furthermore, there is a noticeable gap in reliable statistical data and empirical research that thoroughly analyze the housing demand trends in Nigeria and the actual affordability levels among various income groups. Without such critical data, policymakers and housing finance institutions are left with limited insight for planning and decision-making. The need for up-to-date, data-driven research on housing demand and affordability is therefore imperative to inform meaningful interventions in the sector. It is against this backdrop that this study seeks to analyze the statistical relationship between housing demand and affordability.
1.4 Aim and Objectives of Study
The aim of the study is to analyze the housing demand and affordability trends in Nigeria, focusing on the Federal Mortgage Bank of Nigeria's role in addressing the housing needs of citizens. In achieving this aim, the following specific objectives were laid out as follows:
- To evaluate the role of the Federal Mortgage Bank of Nigeria in providing access to affordable housing.
- To examine the factors influencing housing demand in Nigeria.
- To assess the affordability level of housing among different income groups.
- To analyze the relationship between housing demand and affordability using statistical tools.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What are the key factors influencing housing demand in Nigeria?
- What is the level of housing affordability among low- and middle-income earners?
- How effective is the Federal Mortgage Bank of Nigeria in facilitating affordable housing access?
- What is the statistical relationship between housing demand and affordability in Nigeria?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: There is no significant relationship between housing demand and affordability among Nigerians accessing mortgage loans from the Federal Mortgage Bank of Nigeria
- H1: There is a significant relationship between housing demand and affordability among Nigerians accessing mortgage loans from the Federal Mortgage Bank of Nigeria
Hypothesis Two
- H0: Housing demand in Nigeria is not significantly influenced by economic and demographic factors.
- H1: Housing demand in Nigeria is significantly influenced by economic and demographic factors.
Hypothesis Three
- H0: The Federal Mortgage Bank of Nigeria does not play a significant role in enhancing access to affordable housing.
- H1: The Federal Mortgage Bank of Nigeria plays a significant role in enhancing access to affordable housing.
1.7 Significance of Study
It is believed that at the completion of the study, the findings will provide statistical evidence that will support policymakers in designing effective housing interventions. In addition, private financial institutions will be able to identify opportunities and risks in the housing finance market, aiding in product development.
Furthermore, the mortgage institutions and housing developers will also find the study useful in making informed decisions about investment and loan product designs.
Lastly, the study will serve as a useful resource for policymakers and government agencies by supplying data-driven evidence that will guide the formulation and implementation of more effective housing policies.
1.8 Scope of Study
The scope of this study covers the analysis of housing demand and affordability in Lagos State with a focus on the Federal Mortgage Bank of Nigeria's role. The study will include data collected from selected branches of FMBN in Lagos, housing developers, and mortgage beneficiaries.
1.9 Limitations of the Study
During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- 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).
- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
1.10 Definition of Terms
Housing Demand: It refers to the quantity of housing units that individuals or households are willing and able to purchase or rent at a given time and price. According to Makinde (2014), housing demand is influenced by factors such as income levels, population growth, and urbanization.
Housing Affordability: It refers to the extent to which individuals or households can secure housing without financial hardship. Olotuah and Bobadoye (2009) defined affordability as the ratio of housing costs to household income, asserting that it becomes critical when housing costs exceed a reasonable proportion of income.
Mortgage: It is a legal agreement by which a bank lends money at interest in exchange for taking the title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt. Onyebueke and Hope (2011) described mortgage as a financing tool for home acquisition.
Federal Mortgage Bank of Nigeria (FMBN): It refers to the apex mortgage institution in Nigeria established to provide long-term credit facilities to mortgage institutions and promote affordable housing through the National Housing Fund. Akeju and Olanipekun (2014) noted that the FMBN plays a central role in Nigeria's housing finance sector.
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