1 INTRODUCTION

1.1 BACKGROUND of STUDY. The impact of planning policies on housing outcomes and whether urban planning is the problem or the solution with regard to affordable housing has attracted considerable attention in recent years. The increased interest on the role of physical planning system in the provision of affordable housing stems from the effects of house price inflation on the housing market, demographic changes, increasing levels of urbanization and the drastic reduction in housing stock arising from the widening gap between housing demand and supply in many countries especially the developing economies (Adedeji and Olufemi, 2004; Gabriel & Jacobs, 2006; Gurran & Whitehead, 2011). The house price increases of the past few years created pressures on the supply of affordable housing, increased urban land prices and inevitably priced people out of their local housing market. These developments have resulted in governments initiating and using a wide range of regulatory and administrative processes in the housing market that impact directly or indirectly on housing affordability. It is believed that government regulatory intervention in the housing market is inevitable if low-income families and other vulnerable groups are to be provided with affordable housing (Chiu, 2007). Different aspects of regulation are deployed in the production, allocation, exchange and consumption of housing and are generally aimed at ensuring good housing standards, improving the efficiency of the housing market and moderating housing outcomes that are considered undesirable from

an overall societal viewpoint (Milligan, 2003; Chiu, 2007). However, as governments make efforts to contain unplanned developments and control the output and quality of housing, it appears that some of the planning powers and regulations have fostered unsupportive regulatory environment rather than encouraging affordable housing development (Listokin & Hattis, 2004; May, 2004). The distinctive characteristics of housing and its major role in the society has been a core rationale for government intervention in the housing system of any country. Residential housing is one of the most basic human needs, playing a very important role in the welfare and productivity of the individual (Yates et al, 2007). Housing provides shelter, comfort, security and dignity and is a catalyst for acquiring better education, healthy lifestyles, long-term wealth and a greater civic awareness in communities (Onibokun, 1983). However, even as a basic necessity, only a few have access to the benefits of decent, safe and affordable shelter (Gabriel et al., 2005). In spite of the efforts and interventions of the three tiers of governments aimed at providing adequate and affordable housing to Nigerians, affordability problems continue to affect a large segment of the population, notably the urban poor, single parent families and the unemployed (Agbola, 1998; Ademiluyi, 2010). Since they have low incomes and cannot compete effectively in the housing market, the market provides them with housing that is insecure, unhygienic and often in informal and unplanned locations with little or non-existent infrastructure. In recent times, the problem has expanded to include the young and middle-income households who aspire to own their homes but are increasingly priced out of the housing market and forced to substandard housing in city centres and urban

periphery (Ikejiofor, 1999; Olayiwola et al., 2005a; Ademiluyi, 2010).

Housing affordability seeks to establish a standard in respect of which the amount of income spent on housing is deemed affordable or unaffordable and is used widely in evaluations of the impact of the cost of housing on housing consumers (Milligan, 2003; Hulchanski & Shapcott, 2004). It considers the extent to which housing costs for a given standard of housing affect household income and the capacity of the household to meet the total household needs (Hancock, 1993). Typically, a household is said to have a housing affordability problem when it pays more than 30 percent of its income on housing and utilities (Hancock, 1993; Feidman, 2002; Stone, 2006). The concept has been expanded in recent times to represent a common way of summarizing the nature of housing problems and needs in many nations (Gabriel et al., 2005). The affordability of housing is largely determined by the costs of producing and financing housing and the income levels of households at a given time (Milligan, 2003; Burke et al., 2007), but some other social and demographic factors like the widening gap between the rich and the poor as well as the phenomenal reduction in family sizes also contribute to housing affordability problems (Katz et al., 2003).

The initial motivation for this study stems from the recognition that housing affordability problems transcend the individual and have wider effects on the society as a whole. The effects go beyond the personal experiences of the individual or households and have larger implications on unemployment, labour market performance, community

sustainability and aged care (Gabriel et al., 2005). As housing affordability problems become pervasive in many countries, several issues revolving around the need to bring down housing construction costs, ease housing regulation and other legal and policy matters have risen to the fore. According to Keivani and Werna (2001a), assessing and analyzing the effectiveness of the housing regulatory framework is of prime importance if the widely accepted, World Bank sponsored enable markets to work programme is to succeed. The regulatory environment within which the housing sector operates establishes the infrastructure and organizational framework for the production, exchange, allocation and consumption of the housing commodity (Lawson, 2003). This environment often includes building and related codes, land use and zoning, subdivision regulations and exactions, impact fees, planning laws, licensing requirements, environmental approvals, safety legislation, growth controls and urban growth boundaries, historic landmark laws and associated wage regulations (Shill, 2002; Listokin & Hattis, 2004). These regulations are intended to stimulate orderly and efficient development of the built environment by legislating what can be built as well as the quality of the housing product. They are often justified on this particular basis with the claim that they can improve the quality of housing and enhance better life for households (World Bank, 1993). It is acknowledged that some of these regulations can increase the quality of housing by increasing the quality of building materials and enhancing building practices (Feldman, 2002). Regulations like inclusionary zoning, minimum lot sizes and similar land use controls have been known to remove barriers and encourage the development of affordable housing (Shill, 2002). In general, regulations promote good health, safety,

welfare and have recently being directed towards the preservation of the environment and energy conversation (Adams, 2008; Cheshire & Sheppard, 2003). But the environment within which these regulations operate in developing countries like Nigeria is far from ideal. Rather than promoting the availability and affordability of housing, government involvement in planning and land use in developing countries creates a maze of regulatory and administrative barriers that prevent the housing market from functioning properly (Boudreaux, 2008). The regulations may impose large costs on housing consumers thereby subverting their original intent. Some of the regulatory barriers include bureaucratic bottlenecks, fragmented structures and patchwork of administrative arrangements, inconsistencies, lack of transparency and faulty regulatory enforcement strategies and practices (Feldman, 2002; Adedeji & Olufemi, 2004). Arimah (2010) reports that the land registration process in Nigeria takes about 274 days and incurs fees totaling more than 27 percent of the property value. Similarly, Ikejiofor (2003) cites a situation where entrepreneurs follow a complex process to formally develop land in Nigeria, while Arimah and Adeagbo (2000) find that the increasing level of urbanization in Nigeria and its accompanying problems tend to question the efficacy and relevance of existing urban development and planning regulations. These issues clearly demonstrate the exclusionary nature of the regulatory framework and the inevitable consequences are the imposition of high transaction costs on the housing sector, restriction of residential land supply and supply of low cost and affordable housing, land titling procedures that are difficult to meet and the resultant increase in housing affordability problems (World Bank, 1993; Feldman, 2002). In these circumstances, housing developers therefore prefer

operating in informal housing and land markets, thereby creating and expanding slum and informal settlements. It seems the progress made in housing delivery through the application and enforcement of building regulations may have been achieved at the cost of higher housing price burdens and lower affordability among Nigerians. In this regard therefore, the study attempts to examine the relationship that may exist between development regulations and housing affordability in Nigeria. In doing this, it is important to examine holistically the effects of both the substantive regulatory provisions and their implementation on the affordability of housing. Using affordability as the empirical focus of this study can be justified on a number of grounds. Housing costs constitute a significant element of a household budget and typically expensive relative to household income (Gabriel et al., 2005) and the impact of house prices and rents on housing affordability for households has been established to be important to the operation of the housing market (Milligan, 2003). Affordable housing also plays a fundamental role to economic growth, maintaining stability of families and supporting an acceptable standard of living. In line with this too, Phibbs (2009) and Davis (1993) agree that it is not possible to build sustainable economies if the social and economic networks in the cities are disrupted because of people leaving the cities in search of more affordable housing. Furthermore, Davis (1993) links the availability of affordable housing to the economic vitality of communities, cities and nations. Still, other studies have highlighted the challenges of not having access to important workers such as police, nurses, bus drivers, cleaners, hospital workers because they have left town in search of cheaper housing (EPIC Dot Gov, 2004; ACTU, 2007). In another vein, Phibbs

(2009) associates the location of housing that is affordable to a particular household with the possibility of positively influencing the broader economic and social opportunities and personal life choices of each member of that household. Affordable housing is therefore crucial to a country and its people. Without it, people are bound to be impoverished, families and communities eroded, jobs are lost, the economy is weakened and the environment is damaged.

1.2 STATEMENT of the PROBLEM Traditionally the role of building regulations is to address safety, health requirements, accessibility and the protection of the building and the inhabitants from fire and structural damage. The economic and cost consequences were not a major concern to the various stakeholders in the housing market. But in recent years, considerable interest on the framework for an efficient building regulation system and the social and economic consequences of the regulations has been generated because of the proliferation of regulations and their perceived impact on the supply and cost of housing (Schill, 2004; Gurran & Whitehead, 2011). Importantly, questions about planning regulations and its impact on housing affordability and policies focused on the needs of the urban poor and other vulnerable groups have been prominent among policy makers and academics (Beer et al., 2007). Indeed some of the regulations may be efficient and justified because they promote public health and safety and create amenities, but at the same time may increase housing prices and generate unacceptable affordability problems for low income

households. This has therefore attracted attention to the opportunities for governments to make use of the planning tools and regulatory systems to advance housing objectives, notably the provision of affordable housing. Studies have shown that about 60 percent of Nigerians are without adequate and affordable housing and home ownership rate is less than 25 percent, compared to the 75 percent United Nations benchmark (Okpala, 1992; UN-Habitat, 1996b; Oloyede et al., 2011). The occupancy rate stands at 6 persons per room indicating a high level of overcrowding in Nigerian cities (Adeleye, 2008; UNDP, 2010). The abysmal housing statistics is a fall out of the wholesale adoption of the enabling markets to work policy of the World Bank in the 1980s. The policy expanded the role of the private sector in housing provision and reduced public expenditure on housing. Instead of enhancing the housing conditions and improving housing availability as envisaged, the policy resulted in housing and land price increases arising from the acute shortage of housing. Low household incomes and high housing costs are two major causes of housing affordability problems. While household incomes are dependent on labour market conditions and demographic and social factors, housing costs have a number of components that include labour costs, productivity or mode of housing production, materials costs, quality and regulatory/compliance costs and finance (Gabriel et al., 2005). Land use regulation, which is regarded as a government police function, may influence housing prices by controlling land supply and increasing demand (Chiu, 2007). Research studies on building regulations suggest that a wide range of regulations reduce the supply of affordable housing and generate substantial cost burden on housing

developers and consumers but the magnitude of the individual effects is hard to establish since existing research fails to distinguish the effects of the regulatory standards themselves from their implementation or the way with which they are administered. This study will therefore attempt to examine the impact of both the regulatory provisions and their implementation on urban housing affordability.

Most studies in Nigeria relate almost entirely to the technical impacts of building regulations in the form of increased level of building safety (that sets forth minimum requirements governing structural stability, good ventilation, fire escapes etc), which do not provide a strong base for drawing general conclusions about other housing impacts. In this sense therefore, an important question to be addressed by this study concerns the potential impact of regulatory standards on affordable housing development. In an economy that promotes free market exchange, the housing regulatory environment should pay attention to the different aspects of the approval processes, including the time that elapses while waiting for the approval and the money expended in complying with requirements that lead to high construction costs. The delays caused by the compliance to regulatory standards affect the affordability of housing and reduce the availability and supply of affordable housing particularly in those areas that developers avoid because of the constraints. The degree to which the various sources of regulatory barriers affect the availability and cost of housing is largely unknown, despite the reports of the various studies that suggest a relationship between land-use regulation and housing supply and affordability.

Indeed the issue of government regulations on land development has been addressed over the years by several research studies concerned with building regulations, but the impact of the administration of regulatory standards on housing affordability, in a regulatory context, is an understudied aspect of planning regulation that deserves increased attention. This study therefore draws attention to this area as an avenue for improved understanding of regulatory process barriers which ultimately may lead to the reduction of unnecessary government regulations and delays that may ultimately improve housing affordability.

1.5 THEORETICAL FRAMEWORK

This section considers the theoretical position that shapes the entire design and research investigations. The theoretical assumptions of a research framework are crucial to understanding the overall perspective from which the study is designed and carried out (Krauss, 2005). As a result, the specific techniques and procedures used are driven by theoretical assumptions and reflect underlying values and beliefs of the researcher. Indeed different assumptions have led researchers along different research approaches towards the same phenomenon and these may have important consequences for the conduct of research, interpretation of findings and policy directions. The three main research approaches or paradigms are the scientific, interpretive and critical research paradigms (Scotland, 2012). A research paradigm, according to Guba and Lincoln (1994), is a basic belief system with a set of assumptions concerning reality (ontology), how we know reality (epistemology), and the strategies, plans and ways of knowing that reality (methodology). It represents a worldview that defines the nature of the world, the place of the individual in it, and the range of possible relationships to that world and its parts. In this sense, any given paradigm simply represents the informed view of its proponents and as such is not open to proof in any conventional sense (Guba & Lincoln, 1994: 108). A paradigm consists of the following components: ontology, epistemology, methodology and methods (Scotland, 2012). Arising from its unique characteristics and multiple roles, housing holds different meanings for the varied agents involved in its production, distribution, exchange and consumption. Some of these agents are the households, the professionals (consultants),

the contractors, financiers, and the multiple government agencies involved in planning and regulations. Playing varied and sometimes conflicting roles, these agents therefore perceive housing differently. For households, a dwelling may provide shelter and ownership; for others, housing may represent a capital investment, rental return, a form of social control, a bundle of rights and responsibilities or even a source of economic burden. In this sense therefore housing is described as an object that embodies many cross cutting and complex social, economic and cultural relationships (Lawson, 2003). These relationships underpin and are influenced by the process of producing, allocating, exchange and consumption of housing services (Bassett & Short, 1980; Lawson, 2009). Since there is no consensus about the best theoretical approach or ontological framework for perceiving housing and its multi-faceted dimensions, housing research has therefore used different approaches embodying competing views and social and economic theories culminating and inspiring the various research perspectives and traditions: human ecological tradition; neo-classical economics; institutionalist approaches; political economy; urban managerialism; humanist, behavioural and phenomenological

perspectives and marxist approaches (Lawson, 2003). The main thrust of this study is to investigate the impact of regulatory standards on urban housing affordability. This presupposes a combination of a physical and social process involving social agents and understanding the inter-relation of these agents to each other and to the physical aspects of production, exchange and housing consumption is important in this investigation. Therefore, the study uses the Structure of Housing

Provision (SHP) framework to develop and investigate the structure and social relations in housing provision focusing on the social agents involved in the housing conditions, costs and benefits and the outcome. The concept of a structure of provision, as espoused in SHP, refers to a physical process together with the social agents involved in housing provision that relate to each other in empirically observable ways (Ball & Harloe, 1992: 3). The SHP is a methodological procedure that distinguishes and establishes the relationships between social groups (agents) that influence the production, distribution, exchange and consumption of housing (Ball, 1986). It explains the complex social, political, cultural and economic interactions between various agents and structures of housing provision. The SHP, as a productive framework meant to examine housingrelated issues, asserts that the prime inter-relation between housing provision and the social agents can easily be identified to enable their specification (Ball and Harloe, 1992). It also acknowledges the interaction between the state and the diverse groups involved in the housing market within a framework of rules, policies and regulations that dictate how the housing market operates (Keivani & Werna, 2001b). Studies that used the SHP framework as an analytical tool have in fact demonstrated its usefulness in providing satisfactory explanations of housing market processes (Milligan, 2003).

Although the SHP framework provides a context within which many housing-related issues can be examined, it has some limitations. The SHP does not predetermine the research agenda, but as an operational concept used in empirical research, influences the

ways in which the research questions are examined. It is recognized that for the SHP to be useful, it must be combined with other social theories and methodologies of empirical investigation and where necessary statistical analysis, to provide an adequate explanation for the development of housing systems and their similarities and differences (Ball & Harloe, 1992; Lawson, 2001). The study therefore takes a Critical Realism (CR) perspective to build upon the SHP concept and address the deficiencies attributable to it. Critical Realism, as a philosophy of science and a social theory, is helpful here as it provides the theory for abstracting causal mechanisms, material resources and social relations that underlie forms of housing provision (Lawson, 2009).

Critical Realism is a social theory that seeks an alternative way of research inquiry to the two dominant positions namely: the scientific (positivism) and interpretive

(constructivism) paradigms. For the scientific paradigm, with the ontological position of realism and epistemological position of objectivism, the purpose of inquiry is explanation that leads to the prediction and control of phenomenon, whether physical or human (Scotland, 2012). The interpretive paradigm, on the other hand, aims at understanding and reconstructing the constructions that people initially hold ultimately aiming towards consensus but still open to new interpretations as information and sophistication improve (Guba & Lincoln, 1994). The main ontological tenet of constructivism is relativism that posits that there is no objective reality. Rather reality is individually constructed and as such there are as many realities as individuals (Krauss, 2005; Scotland, 2012). The interpretive epistemology is subjectivism that is based on multiple realities constructed by individuals who experience a phenomenon of interest (Krauss, 2005).

The ontology of Critical Realism is historical realism that celebrates the existence of reality that is independent of human consciousness (Yeung, 1997). This view is based on the conviction that there is a real physical and social world of independent phenomena which cannot be reduced to language; in other words, a real world which has not been constructed, defined or dependent on humans (Fopp, 2008). The epistemology of Critical Realism is one anchored on subjectivism which affirms the social and human basis of knowledge and social phenomena. Within this framework, knowledge and social phenomena are socially constructed and influenced by power relations from within society (Fopp, 2008). This paradigm seeks to transform society and address issues of social justice and marginalization. The possibility of a transformation from an unwanted, unnecessary, and oppressive situation to a wanted, empowering or a more flourishing situation is the main goal of Critical Realism (Potomaki & Wight, 2000; Scotland, 2012). From the above, Critical Realism has elements of both positivism and constructivism combining the rigorous causal explanation in the natural and physical sciences and the importance of meaning and understanding in the social sciences. Healy and Perry (2000) argue that while positivism concerns a single, concrete reality and constructivism multiple realities, Critical Realism concerns multiple perceptions about a single, mindindependent reality where the concept of reality is one that is socially constructed and under constant internal influence. Research inquiry in a Critical Realism framework is value cognizant rather than being supposedly value-free as in positive research, or valueladen as in constructivism. According to Critical Realism, the world is composed not only of events, state of affairs, experiences, impressions, and discourses, but also of underlying structures, powers, and tendencies that exist, whether or not detected or

known through experience and/or discourse (Patomaki & Wight, 2000; Lawson, 2003). It is this underlying reality that provides the conditions of possibility for actual events and perceived and/or experienced phenomena. The conceptual framework and philosophical compass of Critical Realism and its relevance to the present study will be analyzed in detail in the next chapter.

1.6 RESEARCH METHODOLOGY The first part of the research methodology involves an extensive review of the relevant literature to examine and explore studies that are related to the present study. A theoretical framework relevant to the research purpose and one that can help in designing the rest of the methodology is then identified. Thereafter, the methodology that guides the procedure for collecting, analyzing, interpreting and reporting data in the research is chosen based on the dictates of the theory and the enunciated research questions.

The study takes a realist perspective in investigating the impact of regulatory standards on urban housing affordability in Nigeria. Given this understanding and the need to explore all the relevant variables in detail, the study adopts the triangulation approach for the field research. Although the study includes more quantitative-oriented information gathering and data analysis, it nevertheless uses some qualitative methods. Critical Realism uses three methodological guidelines in carrying out empirical research in the names of iteractive abstraction, grounded theory method and triangulation (Yeung, 1997). Triangulation is the most common approach to mixed methods designs and is a combination of methodologies deployed to study the same phenomena. The main purpose

of this process is to obtain different, but complementary data on the same topic (Creswell & Plano Clark, 2007). It enables the researcher to integrate the quantitative and qualitative methods and counter-balance the deficiencies of one method with the strengths of another method.

1.3 AIM and OBJECTIVES OF THE STUDY The aim of this study is to evaluate the impact of the housing regulatory standards on urban housing affordability for the low income households. To accomplish this goal, the study will strive to meet the following objectives:

1, To find out the important determinants of housing affordability. 2, To examine the prevailing framework of regulatory standards with a view to identifying code deficiencies and inappropriate or excessive regulations that may increase housing production and delivery costs. 3, To investigate the effects of housing regulatory provisions on housing affordability. 4, To identify the administrative and technical constraints and sources of regulatory process barriers that impede scale and efficient housing delivery. 5, To stimulate the development and application of a viable housing production system that may encourage affordable housing production and bridge the existing housing affordability gap.

1.4 RESEARCH QUESTIONS Given the objectives and the broad research interest, the following research questions will guide the study: 1, What are the factors that determine housing affordability, from the specific to the broad characteristics of individuals and households? 2, What is the impact of inappropriate and unnecessary building codes on housing affordability? 3, What factors are causing unnecessary delays in obtaining building plan approvals and other permits and how could the processes be streamlined? 4, To what extent is reduced housing affordability attributable to compliance to higher quality standards? 5, Can a framework for an appropriate housing production system be established that could deliver quality and affordable housing in Nigeria?

1.7 SIGNIFICANCE of STUDY The study fundamentally attempts to uncover the technical and administrative impediments that adversely affect housing production and could exacerbate the housing affordability crisis. By critically examining and analyzing the regulatory codes, to define appropriate and inappropriate regulations, the study contributes to the efforts to rein in unplanned development and help expose building regulations that threaten to make development of housing even more expensive than it already is.

Furthermore, the study attempts to give fresh insights into how the housing production system works and how the housing market could effectively and profitably deploy housing inputs towards providing affordable housing in a competitive environment that seeks to promote free market exchange.

Another area this study contributes concerns methodology and the limited scope of previous reports. In this context, the study is designed to address the anecdotal nature of previous reports by conducting an empirically-based quantitative analysis that will include structured surveys of builders and building inspectors. Scope will encompass a more empirical, in-depth study of the building codes and their administration as they affect building construction and their combined impact on housing affordability.

Unarguably, the main goal of any responsive planning regulation on housing should be to achieve efficiency and equity in the production, delivery and ownership of housing. The study therefore seeks to identify the reasons for the failure of the measures applied to the provision of housing in the past by the public and private sectors, which could provide the basis for the development of a relevant and innovative strategy that will achieve extraordinary cost reductions in housing production, delivery and ownership in Nigeria.

Chapter Two
2 THEORY and REVIEW of the LITERATURE 2.1 Introduction In keeping with the research questions set out in chapter 1, this chapter explores the field of housing and housing affordability and reviews literature relating to the Nigerian housing delivery systems, the regulatory environment for the supply of housing services and the framework for using housing affordability in this study. It also provides an overview of the theoretical framework through which the study can be viewed and the conceptual framework that will give direction to the research methods. Following this introduction, section 2.2 briefly gives the profile of the country thereby laying out the context. Section 2.3 considers

2.2 Country Profile With an estimated population of 160 million, Nigeria is the most populous black nation in the world (World Bank, 2008). The country runs a presidential system of government that is based on the 1999 constitution and has the administrative and political capital in Abuja. The constitution was promulgated by a decree on May 5, 1999 and came into force on May 29, 1999. Nigeria is divided into 36 States plus a Federal Capital Territory. The states are further divided into a total of 774 local government areas that constitute the third tier government. The first and second tier governments are the federal and the state governments respectively. The states are grouped into 6 geo-political, non-administrative zones. The zones are North Central, North East, North West, South East, South South and South West and the zones are shown in Table 1 and illustrated in Figure 1. Estimates show that about 52 percent of Nigerians currently live in urban centers as compared to 19.2 percent in 1963 (Aluko, 2004). This indicates a rapid rate of urbanization. Some of the major cities are Lagos, Ibadan, Onitsha, Enugu, Aba, Port Harcourt, Jos, Kaduna, Kano, Sokoto, Maiduguri and Katsina. Nigeria is a large, lower-middle income country with a total land area of 910,800 square kilometers and an economy significantly dependent on oil and gas exports (USAID, 2012). Despite the dominance of the countys oil sector, Nigeria has a large agricultural

economy that basically serves the local market, contributing 31 percent of the GDP, while the service sector accounts for 28 percent of the GDP (UNDP, 2010). Although GDP and other economic indicators have grown over the years, they did not have enduring positive influence on the proportion of people living in poverty. Evidence shows that 64 percent of Nigerians live on less than $1.25 per day and Nigeria is ranked 158th of 182 countries on the United Nations 2009 Human Development Index (World Bank, 2009a; UNDP 2010). The country still faces daunting challenges in generating and maintaining economic progress and stability, housing the people adequately and affordably, improving public sector efficiency and inducing economic growth that will be sufficient to lift the majority of the population out of poverty. The housing situation is rather daunting. There is an estimated housing deficit of 12-14 million housing units and the estimated amount required to provide for this deficit is in the region of US$150-200billion (UNDP, 2010). This calls for the provision of about 500,000 housing units per annum for the next 40 years. Studies have also shown that about 60 percent of Nigerians are without adequate shelter giving a home ownership rate of less than 25 percent, compared to the 75 percent international benchmark (UNDP, 2010; Adeleye, 2008). The occupancy ratio stands at 6 persons per room of 20m2, indicating a high level of overcrowding in Nigerian cities. A detailed analysis of the housing problems in Nigeria will be given in the following section. Some of the critical obstacles to economic development in Nigeria include: economic dominance of the state; character and pervasiveness of rent-seeking; starvation of income-enhancing investments; ineffective and inefficient government institutions; repression of the entrepreneurial economy; pervasive corruption; prevention of reforms; unsupportive business enabling environment; and macroeconomic policy instability and financial unsustainability (USAID, 2003). Correspondingly, life expectancy is low at 47 years and literacy is between 39 and 51 percent. Having provided this background information on Nigeria to serve as the fulcrum for further discussions, the chapter continues with a discourse on housing.

2.3 Housing Discourse 2.3.1 The Concept of Housing Housing is a complex and multi-functional entity that encompasses many varied definitions and meanings. It is a basic non-substitutable element of household consumption and a necessary item in the efficient functioning of any economy (Gabriel et al, 2005). Afolayan (2007) explains that housing comprises the totality of the environment and infrastructure which provide human comfort, enhance peoples health and productivity as well as enable them to sustain their psycho-social or psychopathological balance in the environment where they find themselves. Accordingly housing holds a central position in the welfare of households and contributes to many

dimensions of individual and family wellbeing (Lawson & Milligan, 2007). Figure 2 illustrates the central role of housing on peoples lives. Bourne (1981) defines housing as a physical shelter that translates simultaneously as a capital stock, an economic good, a social artifact, status symbol and sometimes a political entity. But as Aluko (2004) observes, the most important element in all the definitions is that the conception of housing transcends its physical dimension. As such, it can refer to both a service and a capital asset. The service aspect of housing is the shelter, refuge, comfort, security and dignity that housing provides (Harvey, 1993; Carter & Polevychok, 2004; Olayiwola et al, 2005b; Fahey & Norris, 2009), while the capital asset is the physical structure or dwelling that produces this service (Fahey and Norris, 2009). As a capital asset, it can be purchased or rented in various quantities and with a range of amenities and can also be used as collateral for loans or for other investments purposes. Carter and Polevychok (2004) identify yet another function that housing plays in the society. They explain that housing, as an environmental good, consumes resources and generates waste and therefore the size, design, density and the level of energy efficiency are important characteristics that determine the environmental impact of housing. The many characteristics of housing can be grouped under four major domains: physical, financial, locational/spatial and psychological (Platt, 1996: Porteous & Smith, 2001; Dunn, 2003). The four dimensions of housing are illustrated on figure 3. The design features and the quality and condition of the indoor environment of the home constitute the physical dimension. The financial dimension includes the purchase, rental and operational costs. When any of these costs is compared to the monthly or yearly income of a household, it determines the affordability of housing. The spatial dimension encompasses the size, layout and the suitability for household size and composition, while the locational aspects of the home include the location relative to other services as well as the characteristics of the surrounding neighbourhood. Carter and Polevychok (2004) point out that the characteristics of a neighbourhood are very important in determining how people feel about their housing and their level of residential satisfaction. Finally, our home and its contents make very potent statements about us and therefore bear psychological meaning. They represent symbols of our ego and often ensure congruent living with our environment. The home is the quintessential place that is tied to themes of family, friends, community attachment, memory and nostalgia (Platt, 1996). Ultimately people seek and create environments that support and strengthen their perception of themselves and change their physical environments in accordance with who they are. The identity/communication aspect of a house is acknowledged by Robinson (2006: 23) who argues that the spatial world in which we live tells us who we are. We find our self within it, we respond to it and it reacts to us. By manipulating it we affirm our identity. Besides the above functions, housing plays a central and critical role to the attainment of the physical and moral health of the populace and contributes to the general quality of life. It also has considerable economic, social and cultural significance and affects virtually all facets of human performance (Olayiwola et al, 2005b).

Given the important functions performed by the housing asset, as enumerated above, it is not surprising that the government and various stakeholders place a very high premium on the provision of adequate and affordable housing. In fact, few things are as critical as the provision of housing giving its linkages to many sectors of the economy including land markets, construction, labour markets and banking. Bestani and Klein (2006) estimate that there are roughly 600 industries that have links to the housing markets. A stimulus to the demand for housing will therefore have a direct or indirect stimulatory impact and effect on all of these industries. In a similar vein, Aluko (2004) emphasizes that the activities in the house construction industry are labour-intensive and therefore generate considerable employment opportunities especially in the unskilled and semiskilled population of the developing nations. The provision of this basic human need can also have a great impact on a nations developmental goals such as environmental sustainability, equity and the mitigation of natural disasters (Erguden, 2001). In the final analysis, the provision of quality, adequate and affordable housing is basic for human survival and this is one of the primary reasons why many governments intervene in the housing market. Intervention is often inspired by efforts to rectify the imperfections and incompleteness of housing markets. The social and political importance of housing and the reluctance of housing producers to provide housing for the poor through the market, prompts governments in many countries to attempt to provide affordable housing directly through public corporations. But the task of providing appropriate, adequate and affordable housing to the urban poor, though successful to varying degrees in developed societies, has persisted and remained intractable in developing countries. In this regard therefore, it is now widely accepted that a comprehensive approach comprising the identification and inclusion of different modes and agents of housing provision in a holistic integrated policy should be adopted and the role of government intervention will be to ensure that lower income households that are not served by the market, have access to appropriate and affordable housing (Angel, 2000; Renaud, 1999; Keivani & Werna, 2001). However, for this holistic and integrated housing policy and focused government intervention to improve the efficiency and stability of the housing market, the reasons for market inefficiencies and the causes of housing affordability problems must be understood in considerable detail. Understanding the reasons and causes requires an accurate analysis of the key dimensions of local housing provision system, the dynamic context in which the system operates and the evidence of the outcomes that result. This encapsulates the major theme of this study.

2.4 Justification for Using Affordability to Evaluate the Impact of Regulatory Standards and Modes of Housing Production It has been shown in the preceding section that governments intervene in the housing market because of the importance of housing to the individual, the economy and the government and most importantly to improve the housing outcomes for lower income households in the urban areas. In addition to government intervention in housing markets, Milligan (2003) and Kemeny (1995) highlight the influence of economic conditions, political and governance systems, demographic factors, welfare regimes, the urbanization process and cultural traditions on housing outcomes. The interventions, which take the form of housing policies, building regulations, property taxes and land charges, in combination with many other factors that are external to the housing market, have complex and multiple impacts and outcomes in the form of: occupancy rates; housing affordability; neighbourhood quality; physical adequacy; housing quality; and positive and negative effects on health, education, crime, employment opportunities and self esteem (Milligan, 2003; Orr & Peach, 1999). This study is selecting housing affordability, a fundamental social and economic outcome area, to evaluate the impact of regulatory standards and modes of housing production on a number of grounds. Housing costs, at the household and individual level, are one of the biggest and most significant elements of a household budget and typically expensive relative to household incomes or investor resources (Gabriel et al, 2005). The impact of house prices and rents on housing affordability for households has been established to be fundamental to the operation of contemporary market-based housing system (Milligan, 2003). The need to provide affordable housing to meet the demand and expectations of the citizens is also fundamental to economic growth, maintaining stability of families and supporting an acceptable standard of living. In consonance with this, Phibbs (2009) and Davis (1993) observe that it is not possible to build sustainable economies if the social and economic networks in the cities are disrupted because of people leaving the cities in search of more affordable housing. Furthermore, Davis (1993) links the availability of affordable housing to the economic vitality of communities, cities and countries. Still

other researchers have highlighted the challenges of not having access to important workers such as police, nurses, bus drivers, cleaners, hospitality staff because they have left cities in search of cheaper housing (ACTU, 2007; EPIC Dot Gov, 2004). In sum, affordable housing is crucial to a country and its people. Without it, people are impoverished, families and communities eroded, jobs lost, the economy weakened and the environment damaged (ACTU, 2007). Critical reviews by Milligan (2003) on housing affordability also show that the location of housing that is affordable to a particular household influences the broader economic and social opportunities and personal life choices of each member of that household. Adding to this, she asserts that the affordability of housing also influences the quality and quantity of housing that can be obtained and maintained as household income changes. 2.5 Effects of Poor Housing Affordability This study is driven primarily by the recognition that the provision of safe, healthy and affordable housing for households of diverse income and composition in Nigeria is vital on grounds of economic efficiency and development, healthy living, equity and social justice. The pivotal role of affordable housing on the welfare of citizens has been recognized in the previous section and justified as the empirical focus for this study. This section will attempt to address the issue of why housing affordability is important. Studies have shown that declining housing affordability forces households to spend a larger percentage of their income on housing, thereby squeezing expenditure on other non-housing consumption items (Mueller & Tighe, 2007; Ambrose, 2005). These family budget trade-offs reduce spending on food, clothes, recreation and shortchange healthcare and health protection and ultimately affect the quality of life and urban neighbourhoods (Ambrose, 2005). The difficulty in acquiring affordable housing affects both the home ownership and rental housing markets and the effects are felt across all income groups though at varying degrees. Existing evidence suggests that the income groups most affected by declining housing affordability are low-income households in the rental market (Gabriel et al, 2005; Aluko, 2004). One of the main causes of the housing crisis that has been recognized and researched is low incomes. Very low income households have barely enough money to pay for the basics and the most expensive basics is housing. Following income is the high costs of rents and housing units which exacerbates the problem. Low income and high costs of housing have therefore combined to create the barrier and increasing inability for the urban poor to afford average prized homes in the market either in the rental or home ownership segment. Housing affordability is more than just an individual household experience: the effects may also flow through to the neighbourhood and to the broader community. The problems of high home prices and unaffordable housing are multifarious and have implications not only for housing but also for health, urban and regional development, social cohesion, technology, ecology, employment, labour market performance, aged

care, finance, community sustainability, construction, technology and livable cities (Salama & Alshuwaikhat, 2006; Gabriel, 2005). The adverse consequences of declining housing affordability can be classified and examined under four headings: economic, social, spatial and environmental. 2.5.1 Economic Housing that costs more than a household can afford will expose the household to the possibility of foreclosure (Crowley, 2003) and if the property is subsequently sold by creditors for less than the loan outstanding, the family not only loses its home but also remains in debt (Ambrose, 2005). The lack of affordable housing can adversely affect the efficiency with which the labour markets operate and can contribute to a spatial mismatch between jobs and workers, inhibiting migration to high-employment, high-cost locations while encouraging migration to low-employment, low-cost areas (Yates et al, 2007). This phenomenon manifests particularly in relation to the availability of lower-paid workers in high-cost urban centres and may result in wage pressures in the form of higher pay claims that affect the competitive advantage of firms in areas of high house prices by virtue of being unable to attract key employees (Gabriel et al, 2005). Employees find it difficult to support the high housing costs on their incomes and may resort to changing to jobs that are in high affordability/low-cost areas. This ultimately results in high rate of staff turnover which imposes its own costs on the firms. Invariably, every urban economy needs plenty of low-paid service workers and medium-paid essential service workers, as well as high paid knowledge workers to be successful. The economic costs are not incurred by the individual families alone, but affect the local economies as well, when the fear of high interest rates on mortgages creates economic instability as people wind back consumption to avoid falling into mortgage difficulties. The high housing costs and the heavy debt that underpins them give rise to reduced savings and affect investments in other sectors that are essential to the long-term growth of an economy (Yates et al, 2007). The excessive debt burdens undertaken by home purchasers and renters in response to the high house prices also lead to decreased aggregate demand and severe credit squeeze. Poor housing affordability can inhibit and alienate young, creative and innovative workers at the beginning of their careers if the struggle to get a foothold in the local housing market is great. This imposes a significant constraint on the economy as well as a threat to the cohesion of the broader society (DTZ Research, 2004). 2.5.2 Social According to Ambrose (2005) steeply rising house values disrupt household finances and place yet another stress on already fragile families. The increased stress may accelerate relationship breakdown with all the associated personal and social costs and may be felt not only when these events occur but in the period when they are clearly in the horizon. By extension, without secure tenure over housing of a reasonable and affordable

standard, normal family life is difficult to support and full participation in the normal life of the community is virtually impossible. In a similar vein, Mueller and Tighe (2007) consider declining housing affordability as a source of personal hardship and social and political tension in the community; and since our home and its contents make potent statements about us and represent symbols of our ego, poor quality housing can therefore be a great source of shame for many people. Another key finding in this regard is that poor quality housing can cause psychological stress and can negatively impact selfesteem and family self-sufficiency (Dunn, 2000). Another deleterious effect of poor quality and unaffordable housing is overcrowding. Overcrowding, according to DTZ Research (2004) is a hazard to health where sleeping accommodation is congested and ventilation is poor. More than the health hazard, overcrowding also impedes the ability of children to complete homework successfully and timely, negatively influences a childs ability to focus at school, and may result in poor school attendance, thereby increasing stress that leads to poor academic performance (Braconi, 2001). It is important to note that reading takes deep concentration and if there is no silence or quiet time and the TV is always on, children in such environment will have little chance of doing well in school. In the rental market, high housing costs can place the household at risk of not being able to sustain their tenancy, thereby creating an increased potential for homelessness. Cohen (2011) shows that homeless people with chronic diseases may have difficulty properly storing medication, maintaining recommended diet and going to follow-up appointments. The challenges posed by homelessness may also increase the likelihood of engaging in risky behavior such as sharing drug needles or exchanging sexual favours for shelter. Research has shown that declining housing affordability situations force low income families to move frequently to find suitable housing and these frequent moves make it difficult for children to adjust to new schools, friends and neighbours thus leading to poor emotional and social adjustments (Buerkle, 1998). In their study on housing affordability, Yates et al (2007) found that housing affordability has a very significant impact on wealth distribution in most societies and therefore can contribute to social and economic problems that flow from an inequitable distribution of resources. The housing market as it is today seems to serve as a veritable tool for channeling wealth and economic resources away from those outside the housing market (such as renters and would-be home owners) to those inside the market (such as existing home owners). The rising housing costs create substantial increases in the asset levels of residential property owners and the rich thereby widening the gap between them and the majority of non-owners. This phenomenon also tends to favour the older generation at the expense of younger people with its attendant disaffection and youth restiveness. In support of this assertion, other research reports show that the proportion of income devoted to housing costs tends to rise as one moves down towards the bottom of the income scale and this may well indicate that income inequality or the wealth gap will continue to widen (Ambrose, 2005).

A study reported in Social Trends 34, 2004, and cited in Ambrose (2005: 186) shows that unsustainable forms of home ownership may force couples to put back the age of having a first child and perhaps further children. The study further shows that fertility rate in the under-29 age groups declined sharply while those of women in their late 30s almost doubled. This phenomenon is not surprising given that increased and longer participation in the labour market is necessary for households to earn enough money to build their homes or maintain their rented apartment. 2.5.3 Spatial Research has consistently found a positive relationship between the high cost of urban land and the attendant high cost of housing and the proliferation of squatter settlements and slums (Olayiwola et al, 2005a). In this impoverished public realm, households already disadvantaged in the labour market and forced by lack of resources to live there, suffer reduced effective access to affordable housing. This helps to entrap the households in the disadvantaged areas with inadequate social amenities and unsatisfactory environmental conditions (DTZ Research, 2004). In addition to reducing the job prospects of households, the locational concentration of low income households in these areas of high affordability increase the levels of crime and anti-social behaviour and undermine social cohesion and community bond. This kind of environment significantly raises strong barriers to the influx of investments and key workers and its attractiveness as a place to do business and live. A report by Berry (2003) draws attention to the fact that the segregation of households in response to differentials in relative affordability in urban areas has the potential to create spatial polarization and impair economic and social sustainability. As Gabriel et al (2005) point out, increasingly polarized cities foster defensive behaviours that can undermine a sense of wider citizenship as people retreat to and structure a life around their own small, gated world and ignore their social obligations. 2.5.4 Environmental A popular clich goes thus: innovate or die. This also applies to housing where innovations are needed for greater environmental sustainability in the areas of more efficient use of building materials and design. But the existing high cost of housing may inhibit progress towards achieving such goals since building and associated industries would rather concentrate on keeping house prices down than to undertake the innovations needed (Gabriel et al, 2005). In sum, there is a wide range of reasons why housing affordability is important. It has been shown that there is a positive relationship between declining housing affordability and substandard living conditions, shrinking employment opportunities, economic stagnation, social exclusion and environmental problems. The next sub-section will consider and outline the framework for using housing affordability in this study. The study will examine the concept of housing affordability and what is known about its determinants and established ways of measuring and evaluating affordability outcomes.

2.6 The Concept and Dimensions of Housing Affordability 2.6.1 The Concept of Housing Affordability The concept of housing affordability gained ascendancy in housing policy issues in the 1960s and has recently become a common way of summarizing the nature of housing problems and needs in many nations (Gabriel et al, 2005). The term became an integral part of international housing policy discourse in the 1980s when governments around the world started adopting neo-liberal modes of housing provision as part of the retreat of the state from public responsibility for the plight of the poor (Stone, 2006). In other words, the issue of housing affordability became critical due to government disinvestment in public housing and replacement of public housing mechanisms with market driven systems. This has inevitably drawn the attention of many stakeholders within the housing sector and pushed the concept of housing affordability into the centre of policy discourse and widespread usage in the last 30 years (Ndubueze, 2009). Two other factors also account for the emergence of housing affordability as a major policy problem. The first is the fact that housing comprises the main share of household assets and debts, estimated to be between two and three times the annual family income (OSullivan, 2003), and small changes in housing prices have large impacts on household welfare. The second factor is that rising house prices place social and economic pressure on lower income households (Quigley and Raphael, 2004). The term is used widely in evaluations of the impact of the cost of housing on consumers but with a number of different meanings and measures (Milligan, 2003). However, the most general use of the term centers around consideration of the extent to which housing costs for a given standard of housing affect household income and the capacity of the household to meet the total household needs (Hancock, 1993). In the period of its initial formulation, a household is said to have a housing affordability problem when it pays more than 25 percent of its income to obtain adequate and appropriate housing (Hulchanski, 1995). This measure of affordability has been evolving over the years. According to Kutty (2005), the measure was 25 percent of income until the early 1980s and 30 percent since then. In practice, however, the ratio differs for different income groups. Higher income groups pay much less proportion of their income on housing than the lower income groups. This suggests that higher income households have more discretion over their housing expenditure and have higher residual income for other household needs (Van der Heijden & Haffner, 2000). Issues surrounding the value of the benchmark and its origin have raised concerns and debate among researchers prompting Quigley and Raphael (2004) to warn that researchers were setting affordability at a range of values that inhibits proper, accurate and comparative analyses of the phenomenon. Reflecting on this also, KonadoAgyemang (2001) suggests that the idea that no more than 25 percent of a households income should be spent on housing may have developed out of conventional wisdom and local experience that housing costs are normally around a quarter of a households income. This was believed to be the maximum people could spend on housing without jeopardizing their ability to acquire other life essentials. This 25-30 percent benchmark,

according to Hulchanski (1995) is more or less a rule of thumb that was determined primarily by private market requirements and does not recognize household types and characteristics nor the trade-offs that can be made by a household. The rationale for such a benchmark therefore reflects historical and philosophical judgments rather than evidence-based reasons (Burke, 2003). The 30 percent of household income, when translated to a ratio results in what is commonly known as housing expenditure-to-income ratio. The ratio was used in the early 20th century by mortgage lenders and later by private sector landlords in North America as an appropriate indicator to predict a households ability to pay the mortgage or rent (Gilderbloom, 1985 cited in Hulchanski, 1995). The 30 percent benchmark is now the most frequently cited standard and defines a unit of housing as unaffordable if a household would have to spend more than 30 percent of its gross income on housing and utilities (Feldman, 2002). Although some researchers, Quigley and Raphael (2004) for example, believe that the housing expenditure-to-income ratio can be a misleading measure of housing affordability, others opine that in spite of its shortcomings, it is a useful starting point in understanding the possible meanings of the concept of affordability (Gabriel et al, 2005; Hancock, 1993). There is also a difference in the concept of housing affordability as it applies to the communist and capitalist economies. The 30 percent benchmark applies to capitalist states, whereas in the communist countries, any rent above 4-6 percent of the family income is considered excessive (Konadu-Agyemang, 2001). Housing affordability is often operationalized and expressed in terms of affordable housing (Stone et al, 2011) and as Nubi and Afe (2011) explain, affordability is fundamentally what is needed to transform abstract housing thoughts into tangible assets. In this context therefore, affordability expresses the necessity of financial resources in achieving affordable housing. Other related concepts used in the context of housing affordability are housing accessibility and housing stress. Housing accessibility reflects the initial conditions facing a potential tenant or house owner that may make a purchase or rent more accessible (Robinson et al, 2006). It provides an indicator of financial thresholds for households to enter a segment of the housing market. The conditions for entry may include equity deposit from individual or household income, interest rates, house prices, rents, taxes associated with arranging mortgage finance and government housing policies. Expressed differently, a person for whom housing is unaffordable is in effect lacking access. Housing stress on the other hand, encompasses the ways in which households experience affordability problems. It denotes the negative impacts of insufficient income to secure adequate and affordable housing and may include other factors such as overcrowding, insecure tenure, unsafe or inaccessible locations, marginalization and stigmatisation (UNHabitat, 2011; Gabriel et al, 2005).

2.6.2 Defining Housing Affordability

Several studies have shown that market failures have caused the housing market to deliver affordability outcomes that are deemed unacceptable to society (Stone et al, 2011; Whitehead, 1991; Quigley and Raphael, 2004). Therefore, to facilitate policy formulation and operational interventions in the market, suitable definitions of what is regarded as affordable need to be developed and the concept of housing affordability clarified. In doing this, it will be noted that definitions ultimately involve value judgments not only about quality and attributes of housing but also about the relationship between housing expenditure and housing income. It will be borne in mind also that the term is potentially tenure neutral and may span the full range of housing tenure types, including private home ownership, private rental and social housing. Finally it will be worthwhile to emphasize that the term is both individual, intangible and determined by the unique circumstances, needs, expectations and resources of people (Berlin, 2010). A survey of literature indicates a variety of approaches on the definition and measurement of housing affordability (Ambrose, 2005; Quigley & Raphael, 2004; Hulchanski, 1995; Hancock, 1993; Stone, 1993). Housing affordability simply means the ability to afford housing and beyond this point, as Ndubueze (2009) notes, any attempt to precisely grapple with the concept becomes slippery. To some degree, the lack of consensus among academics and housing experts on the conceptualization of housing affordability reflects the different assumptions and priorities of researchers and institutions with different disciplinary backgrounds and objectives. In this regard, the contested nature of housing affordability can be linked to different understandings of its root causes and drivers especially as they relate to inadequate family incomes or inadequate housing (Gabriel et al, 2005). Gabriel et al (2005) further note that sociologists generally focus on concerns about social inequality, household experiences, housing need and supply while economists tend to frame their definitions on incomes, housing costs, housing finance and consumption patterns. In his contribution to the debate, Grigsby (1990) links the two predominant approaches to housing policy issues - demand-side and supply-side instruments, to housing affordability being perceived primarily as a problem of poverty or inadequate family incomes on one hand and on the other a problem of housing poverty or inadequate housing. This is absolutely in line with the maxim that defining a problem in different ways will obviously result in different solutions. In this regard, housing policy development in countries guided by concerns about housing poverty emphasize supply-side approaches, such as the provision of social housing, planned development and the use of urban planning instruments. In contrast, countries that see lack of housing affordability as a problem of poverty focus on demand-side approaches, such as targeted rent assistance and subsidies. Housing affordability is commonly defined by the relationship between a households housing expenditure and household income (Freeman et al, 1997; Linneman & Megbolugbe, 1992; Whitehead, 1991). The term seeks to establish a standard in respect

of which the amount of income spent on housing is deemed affordable or unaffordable. In this context therefore, housing affordability expresses the challenge each household faces in balancing the cost of its actual or potential housing on one hand and its non-housing expenditure, on the other, within the constraints of its income (Stone, 2006). In conveying the notion of housing costs in relation to income, the term describes the social and material experiences of households in relation to their individual situations, in what Stone et al (2011) refer to as a relationship between housing and people. Hulchanski (1995: 471) gives a guideline on how to define housing affordability and contends that a household is said to have a housing affordability problem, in most formulations of the term, when it pays more than a certain percentage of income to obtain adequate and appropriate housing. This alludes to household income and housing costs as important elements of affordability and shows concern with the standard of housing consumption when it mentions adequate and appropriate housing. In a similar vein, Maclennan and Williams (1990: 9) proffer their own idea of what housing affordability entails and state that affordability is concerned with securing some given standard of housing (or different standards) at a price or rent which does not impose, in the eyes of some third party (usually government), an unreasonable burden on household income. In addition to addressing the ratio of income to housing costs, the statement points to some social and societal minimum and desirable expectations. The concern with an unreasonable burden on household income may imply a consideration of the capacity of households to meet both their housing and non-housing costs, thereby maintaining adequate housing and a good standard of living. Countering the view of affordability in terms of a certain fixed percentage of income, Bramley (1990: 16) introduces the concept of residual income and contends that households should be able to occupy housing that meets well-established (social sector) norms of adequacy (given household type and size) at a net rent which leaves them enough income to live on without falling below some poverty standards. While he speaks of some quantity of non-housing consumption that society regards as socially desirable minimum, the definition also includes spatial variation and household composition. Zacchaeus 2000 Trust (cited in Ambrose, 2005: 172) offers a rather more comprehensive definition that includes adequate residual income. It states that once necessary payments on rent or mortgage (including service charges and council tax) have been made, be the household an individual, a family or people of pension age, there remains sufficient income to sustain safe and healthy living, support the needs of any children of the household at school and participate in the life of the community. Unaffordable housing means that the residual income left after all housing costs have been met is not sufficient for these purposes. Aside the tenets of capacity to pay and the ratio benchmark, this definition brings to the fore the issue of opportunity cost of housing which Hancock (1993) considers as the essence of the concept of affordability: what has to be foregone in order to obtain housing whether that which is foregone is reasonable or excessive in some sense (Hancock, 1993: 129). In everyday life however, housing affordability transcends the matter of housing costs, household income levels and a households ability to purchase housing, and includes occupation variables or the costs associated with keeping and maintaining a house. In

essence, housing affordability is principally set by two main variables: capital variables and occupation variables (UN-Habitat, 2011). The capital variables include the house purchase costs and the ability to finance purchase, while the occupation variables include house occupation costs and the ability to financially service the running expenses. Figure 4 illustrates the many dimensions of housing affordability. Another key determinant of the availability, accessibility and affordability of housing is the role played by the informal sector in housing production (UN-Habitat, 2011), considering that about 90 percent of housing is produced by the informal sector in developing countries as noted in chapter 1. Section 2.6.4 considers housing informality in greater detail. Within the varied definitions of housing affordability, five standards emerge as the core components of the concept: housing costs, household income, socially accepted standards of housing, quality of life and occupation variables. These elements and others like the labour market conditions that affect a households ability to earn an income, interest rates that affect the costs of borrowing and other housing and material inputs combine to constitute the factors that affect and determine housing affordability. In whatever way housing affordability may be defined, all housing will remain affordable for some people no matter the price while for others no housing will be affordable unless it is free (Stone et al, 2011).

2.6.3 The Drivers of Housing Affordability In the previous section, housing affordability is shown to be largely determined by the costs of producing and financing housing and the income levels of households at a given time. But the housing costs and household income are influenced by a combination of factors both within the housing system (including housing policy interventions) and beyond it (including labour market relations). The above factors, in combination with local and international economic, social and political issues impact on housing affordability. In general there are supply side and demand side factors that drive housing affordability. The supply side factors are the forces that influence the cost of housing through the housing production process while the demand side factors shape the household consumption and purchasing power. The variables on both sides, that is, the production and consumption of housing are mediated through the exchange process. According to Milligan (2003), the way that housing is paid for (afforded) depends on the nature of that exchange, whose interest the housing exchange system serves and who benefits from the profits and fees generated. Housing can either be sold or rented under a variety of arrangements, payment terms and rates. The system of housing exchange increases in importance as the housing stock ages and is usually organized through a series of intermediaries, who may include estate agents, valuers, surveyors, housing finance institutions, solicitors and land deed registrars (Rakodi & Mutizwa-Mangiza, 1990). (The sources that have been drawn on to present the drivers of housing affordability include Feldman, 2002; DTZ Research, 2004; Hulchanski et al, 2004; Ambrose, 2005; Lawson & Milligan, 2007; Yates et al, 2007; Darmanin, 2008; NZPC, 2011).

2.6.3.1 The demand side. Income plays a fundamental role on housing affordability because it determines a households ability to pay for housing. Household income is dependent on labour market conditions and demographic and social factors that influence the size and the formation and dissolution rate of households (Milligan, 2003). Labour market changes impact on the households ability to participate in the housing market especially now that there is increased casual and insecure employment that generates income insecurity and low wages/salary rates. Changes in population and household profiles are key to understanding housing need and demand and these changes affect the housing market, influencing the demand and supply of housing. The underlying demand for housing is primarily driven by household formation which reflects population growth and changes in household size (Whitehead et al, 2009). According to NZPC (2011), household formation has been increasing faster than population growth owing to the general preference for smaller households. In the highly constrained housing market of today, the increase in demand simply drives up housing prices. Added to this is the production of housing types that are not always reflective of the changing demographic profile Other related factors shaping the purchasing power of the households include: the underdeveloped housing finance systems that cannot give mortgage credit at a reasonable rate; the high interest rates that fuel house price appreciation; the preference for homeownership and the trend toward the construction of larger individual houses has led to the increased disparity between demand and supply; the consistent differentiation of the housing situation by tenure, location and generation giving rise to socio-spatial polarization and segregation leading to social exclusion; property is often considered as an investment instrument and sometimes this leads to price speculation. Demand may therefore become excessive if people develop unrealistic expectations about the returns from housing investments relative to other investments. In this sense, the investment perception of housing predominates over the consumption aspect creating a situation similar to the housing bubble experienced in the United States of America; government measures aimed at subsidizing the cost of housing such as tax concessions, rent law and government assistance for home owners actually help to increase prices in the private housing market.

2.6.3.2 The supply side Housing costs generally have an impact on the ability of households to access affordable and sustainable housing. They set the price and payment levels required to either purchase or rent a house. Higher housing costs add to the upward pressure on rents and as housing costs increase, the cost of home ownership also increases. Some of the factors that affect housing costs include: land-use regulations and costs associated with the preparation of development applications that increase the cost of housing production; holding charges and costs caused by delays in approving land for future development;

shortages of skilled labour and poor management capability; higher costs of compliance causes by increased environmental and regulatory requirements; lack of innovation in the building industry most of the work is still carried out on site rather than by assembling prefabricated components that are manufactured off site; insufficient supply in the one and two bedroom housing sub-market; insufficient supply of construction finance and high interest rates on construction loan; containment of new developments in urban centers without providing adequate development opportunities for new development at city fringes or virgin land; substantial increases in housing-related infrastructural charges due to inflation and corruption; increases in taxes, development levies and withholding taxes. Some other factors that affect housing costs include policies that restrict land supply thereby increasing land values which have a marked impact on housing affordability. The constraints on land may be environmental or topographical and may result from inappropriate zoning and lack of infrastructure (Brownlee, 2008). The reduced housing access resulting from the constraints increase the cost of residential land especially in urban centers. This is a major reason for the decline in the supply of new housing. There is also political and community opposition to urban expansion into rural areas as well as an increase in speculative land holding, following the liberalization of land development. Another cost related issue is the loss of specific types of housing like the low cost private rental apartments, social housing or government-subsidized housing and boarding houses. Social housing or low income housing production has declined considerably due to privatization and the adoption of neo-liberal policies that brought changes in the housing roles assumed by governments and the complete withdrawal of the welfare regimes in housing policies. Major changes in government financing, land release and urban planning policies toward a more privatized system of housing supply have also contributed to the decline in housing supply. Figure 5 illustrates the factors that drive housing affordability. 2.6.4 Informality and Housing Affordability It is reported in section 2.6.2 that a key determinant of housing affordability in developing countries is the role played by the informal sector in housing production. Earlier in Chapter 1, the inability of low income groups to participate in the formal or conventional housing market was shown to be a major reason for the preponderance of informal or extra-legal mode of housing production in developing countries. This section examines the issue of informal housing more closely. Informal housing and informal employment are two important aspects of the contemporary urban economy. While all formal economic activities operate under the purview of the law, a major and salient characteristic of informal economic activities is their extra-legality (Hansen & Vaa, 2004). The informal economy is characterized by its ease of entry, reliance on indigenous resources, family ownership of enterprises, small scale of operations, labour-intensive and adapted technology, skills acquired outside the formal school system and unregulated and competitive markets (ILO, 1972; UN-Habitat, 2003; Hansen & Vaa, 2004). Although the activities in the informal economy are extralegal or irregular from the official standpoint, most of the actors concerned consider them

not only functioning but normal and legitimate. Arimah (2010) associates the widespread crisis of state capitalism and the collapse of the state in developing countries with the proliferation of informal activities and the general in-formalization of the economy. Housing is described as informal when it does not conform to current regulations concerning land ownership, land use, zoning or building codes and bye-laws (Shlomo, 2000). Principally, informal housing uses a labour-intensive mode of production and utilizes a large input of self-help labour and improvised building materials (DrakakisSmith, 1981, cited in Keivani & Werna, 2001). However, a considerable number of informal houses utilize modern materials, industrial methods of production, organized wage labour and building contractors. Some of the common characteristics of informal housing are insecurity of tenure, overcrowding, low profile/informal economy, inadequate access to safe water, inadequate sanitation, poor structural quality of housing, improvised building materials and processes, non compliance to local building codes, location in harzardous zones and economic and social deprivation (UN-Habitat, 2003; Nabutola, 2004; Arimah, 2010). Informality in housing and land occupation is a multidimensional phenomenon and one of the most visible characteristics of major third world cities (Arimah, 2010; Smolka & Biderman, 2011). The exact form of informal housing however depends on the political, socio-economic and cultural conditions of the individual cities/localities. In this regard, the consolidation of state power and its willingness to enforce planning rules is the major factor that determines the extent of informal housing (Gilbert, 1990). A study by Shlomo (2000) shows that in 1990, about 67 percent of housing units in developing countries are informal and unauthorized while essentially none existed in high income, developed countries. Numerous socio-economic factors drive the formation and growth of informal settlements but much of the literature on housing identifies rapid urbanization, widespread poverty and the inability of many governments to control physical developments within their domains as major factors in the prevalence of informal housing (Tipple, 1994; UN-Habitat, 2003; Davis, 2004; Arimah, 2010). An analysis of the incidence of informal housing in developing countries and economic models of informal housing markets show that the phenomenon can best be approached as a housing affordability issue since low income households have incomes that are below the levels needed to bid competitively for housing in the open market (Smolka & Biderman, 2011). Informal housing can therefore be seen as a distinctive type of housing market where affordability accrues through the absence of formal planning and regulation (Roy, 2005: 149) Available projections point to a rapidly growing urban population in much of the developing countries in the face of rising unemployment, poor agricultural performance, financially weak central governments and the absence of sound urban planning policies to respond to high level of urban growth (Cheru, 2005). Obviously this translates to a stronger demand for scarce resources that will drive up the value of land and make it more difficult for the urban poor to find affordable space in desirable locations of the cities. Existing cities are likely to be larger and their housing and associated infrastructure will need major additions. Governments are unable to manage the swelling responsibilities because the resources to meet this considerable housing challenge is

lacking. The inability of the government and the formal housing market to provide adequate and affordable housing has led the majority of urban population to build shacks in informal settlements and live in housing built without authorization. Other options open to the urban poor, including living at the urban periphery, are also unaffordable because of high transportation costs, lack of basic services and lack of employment in these locations. In the absence of any effective, large-scale response to housing shortages by the state or the formal private sector, the housing requirements are being addressed by the poor themselves, through the housing they build in informal settlements (UN-Habitat, 2008). It is not surprising therefore, that the most effective supply of housing in the developing countries takes place outside the law (Hanson & Vaa, 2004; Boudreaux, 2008). Many governments formulate laudable policies and programmes to provide affordable housing but ineffective implementation makes the efforts futile with very poor results. Factors such as lack of resources, corruption, inadequate capacity and patronage combine to reduce the ability of the governments to meet the increased demand for new housing let alone catch up with backlogs (Tipple, 1994; Uji & Okonkwo, 2007). Bureaucratic red tape and high transaction costs on land have inadvertently created land scarcity, limited the availability of credit for both developers and potential buyers and made the process of acquiring tenure security complicated and expensive (Boudreaux, 2008; Smolka & Biderman, 2011). High interest rates and rigid labour laws also make it difficult for the poor to access commercial credit for mortgages and to develop affordable housing of their own (Boudreaux, 2008). Informal housing is therefore partly a creation of the state since some of the policies largely increase the economic incentives that encourage informal housing development. Stiff planning, regulatory and building standards that often exclude cheap traditional building materials used in informal housing also contribute to the development and expansion of informal settlements. Furthermore, high minimum plot sizes, low densities, inappropriate zoning, high land use standards and land titling laws that are difficult to meet are implicated in the process that produces informal settlements or what Roy (2005) describes as the unplanned and unplannable. Even self-building, to conform to the minimum lot size requirements or current building codes is unaffordable given the high transaction costs associated with this mode of housing. Arimah (2010) reports that the land registration process in Nigeria takes about 274 days and incurs official fees totaling more than 27 percent of the property value, while Ikejiofor (2003) cites a similar situation where entrepreneurs follow a complex process to formally develop land in Nigeria. These issues demonstrate the exclusionary nature of the regulatory framework and bureaucratic procedures that restrict the provision of formal housing that is affordable to the urban poor. The barriers create incentives for developers to shun the formal approval processes and operate in informal housing and land markets. Poverty and social exclusion also play a primary role in the formation of informal housing settlements across the globe. In a study by Arimah (2010), an increase of 1 percent in GDP per capita is found to occasion a reduction of 7.6 percent in the proportion of a countrys urban population living in slums. This finding reinforces the observation that informal settlements are a physical and spatial manifestation of urban

poverty and intra-city inequality (Nabutola, 2004; World Bank, 2006). However, this perception attempts to localize the issue and essentially exempt local urban planning managers from responsibility for the problem (Smolka & Biderman, 2011). Increased levels of infrastructure can serve as a means of promoting formality in housing and findings show evidence of a positive correlation between infrastructure development and economic growth (Estache et al., 2002; Warr, 2005; Edelman & Mitra, 2006). Warr (2005) reports that infrastructure development plays a major role in promoting growth and equity and through both channels help reduce poverty which is linked to the development of informal settlements. At first glance, informality in housing seems to epitomize illegal, irregular and clandestine activities by those who engage in it. However, as Roy (2005) observes, residents of such housing have no other choice for shelter and the situation would seem to entail deliberately breaking the law. In a general overview of informal housing, Krueckeberg (1995) argues that the residents of informal settlements are exercising their right to the city and providing essential services, in contrasts to the planners view that such houses are illegal and should be removed. The informal settlements contain enormous stock of affordable housing that provide accommodation for the work force of the urban centers, and in so doing, enable cities to grow and prosper (UN-Habitat, 2008). The adoption of neo-liberal housing policies which has resulted in the reduction of public sector housing provision along with lack of social security safety net programmes have resulted in increased inequalities in the distribution of wealth and resources at all levels (Durand-Lasserve, 2006). In this sense, Tibaijuka (2007) and Roy (2005) converge on the idea that the more fundamental issues at stake in housing informality are wealth distribution, unequal property ownership and rising poverty and inequality. This implies that a good deal of attention is needed on the sort of housing markets that are at work in our cities and how they shape or limit housing affordability. To deal with informality therefore means that urban development policies should more vigorously address the issue of livelihoods of slum dwellers and urban poverty, going beyond traditional approaches that concentrate on improvement of housing, infrastructure and physical environmental conditions (Nabutola, 2004: 8). According to Smolka and Biderman (2011), there is a complex set of dependency between informal housing/land markets and formal settlements which shows that informal settlements are in fact compatible with otherwise well-functioning housing and land markets. The informal city is no more the exclusive domain of the poor. Evidence shows that the better-off segment of the urban population also engage in illegal land occupation and construction, reaping extraordinary profits and paying little or no taxes and levies (Hansen & Vaa, 2004). The urban periphery and marginal areas of cities, previously known for harboring the urban poor, are now under increasing gentrification pressure (UN-Habitat, 2011), confirming the observation by Aguilar and Ward (2003) that the rural/urban interface is in fact the site of the new informality in many countries. The metropolitan fringes of cities have indeed become a key location for the informal housing practices of the elite and well-to-do, actively supported by the ruling class. This class of upscale informal housing development is often encouraged and promoted by

agents of the state and usually counts on future regularization of title and premium infrastructure provided by the state (Graham & Marvin, 2001). This trend is contrary to popular perception that the informal housing settlements are homes to the poor and point to the fact that such settlements are not totally localized and the inhabitants do not form a homogenous population. Therefore, the reality is that within the informal city lie a multitude of different income classes and communities. The facts above do not show a distinctive dichotomy between formal and informal housing settlements, but reveal a continuous interface between the two entities. The evidence shows that the well-to-do as well as the poor live side by side in informal settlements and seek livelihoods together in the informal economy. The issue at stake is therefore not legality versus illegality nor the well-known dichotomy between formal and informal housing but the challenge of providing adequate and affordable housing for all. Having explored the issue of housing affordability as it relates to this study, the next section will examine the conceptual basis of the quantitative indicators of housing affordability that will be used later. 2.7 Approaches To Measuring Housing Affordability When a household procures and consumes housing at a given cost it places a burden on its income. The ratio of the housing cost to income provides a measure of the burden placed on that household (Rowley & Ong, 2012) and this involves comparing housing costs to a households ability to meet the costs (Engeland & Figueroa, 2008). In effect, housing affordability measures quantify the extent of discrepancy between the current housing expenditures of households and what they are expected to spend, given their consumption needs (Bogdon & Can, 1997).There are two main approaches to measuring housing affordability in housing research. They are the ongoing costs measures and the access affordability measures (Gabriel et al., 2005). 2.7.1 The Ongoing Costs Measures The ongoing costs measures are the most widely used and are classified into two main categories. The first is referred to as the ratio measures, wherein affordable housing costs are set as a fixed proportion of income within set income bounds. The ratio measures are also known as proportional measures or the housing quota (Boelhouwer & Menkveld, 1996; Landt & Bray, 1997). The second category is referred to as the residual measures which are concerned with the relationship between housing costs and the capacity of the household to maintain an acceptable standard of living (Gabriel et al., 2005). The residual measures are also known elsewhere as the living standard measures, non-shelter first or after poverty measures (Milligan, 2003; Stone et al., 2011). 2.7.1.1 The Ratio Measures The ratio measures are the dominant and most commonly used measure of housing affordability. They express defined housing costs as a proportion of household income and relate this to selected standards of affordability (Landt & Bray, 1997). The underlying principle of a ratio approach is that a household will not have enough income

left for other household necessities if it pays more than a certain benchmark percentage of its income for housing. Typically, a benchmark of 25 or 30 percent of household income is specified (Stone 2006; Henman & Jones, 2012) and a dwelling is thus deemed affordable if housing costs, as a percentage of household income are below the benchmark. There are two major variants of the ratio measures: house price-to-income ratio for assessing the housing affordability of home buyers and rent-to-income ratio for assessing the affordability of rental households.

Owing to the lack of consensus on how to define the elements of housing affordability and the varied circumstances of individual households, differing measurement approaches have been developed over the years. Which measure is used depends primarily on the objectives established by each researcher, given that different methods are based on different assumptions and therefore yield different results.

2.5 THE NIGERIAN HOUSING SECTOR 2.5.1 The Nigerian Housing Paradigm Nigeria has operated a neo-liberal economy since the 1980s, undertaking massive programmes of privatization and supporting market-oriented housing system (Olayiwola et al, 2005a). This has been followed with constant and yearly housing budget cuts that are greater than in any other government sphere of expenditure. The idea of a smaller state, as espoused and promoted by the World Bank, was gaining ground within this period and various instruments started to be used to promote the market and reduce public expenditure (Keivani and Werna, 2001; Israel, 1990; Kimm, 1987). Consequently, there was a near universal acceptance of expanding the role of the private sector in the field of housing provision in developing countries (Keivani and Werna, 2001). However, the wholesale adoption of this economic model in Nigeria and the move away from state provision of housing has neither enhanced the housing conditions nor improved housing affordability. Instead the adoption of the policy was accompanied with a serious shortage of housing and unprecedented increase in housing and land prices. In Nigeria, like in most developing countries of the world, the pace of urbanization has proceeded faster than economic development resulting in rapid deterioration of housing conditions and the creation and expansion of slums and squatter settlements (Olayiwola et al, 2005b). Rather than having positive implications for societal and national development, the urbanization process was accompanied by unplanned urban sprawl, environmental pollution, unemployment, poverty, crime and deficiencies in basic infrastructural facilities (Aluko, 2004). Inappropriate housing and urban development strategies have also contributed to the failure of the housing programmes undertaken by the government. There was minimal coordination among government agencies that handle housing matters and many government housing programmes were not accompanied by effective plan of action and appropriate institutional arrangement for execution. Politics and excessive corruption became part of project planning and execution, resulting in very little success been recorded (Ademiluyi, 2010). To further compound the problem, the administration of building planning codes, town planning ordinances and environmental policies are often at odds with the policies designed to achieve and maintain adequate and affordable housing (Aluko, 2011). Housing deregulation, free market orientation, reduction in the role of government and the impersonal play of demand and supply characterize the housing market and reflect the trend in Nigeria where the market is allowed full reign in the housing sector. This is completely devoid of any aspects of the welfarist system where housing is viewed as a right and entitlement which is the states responsibility to provide for (Culpitt, 1999). The result is a market-dependent system that produces houses at rates that are beyond the reach of the majority of Nigerians. This is diametrically opposed to the goal of ensuring

that all Nigerians own or have access to decent, safe and sanitary housing accommodation at affordable cost with secure tenure (Federal Government of Nigeria, 2002). The neo-liberal housing policy trend is associated with the wholesale adoption of a new housing approach named enablement, which was promoted by the World Bank and its associated researchers in the 1980s (Takahashi, 2009). The enablement strategy translates to a change in the nature of government intervention in the housing sector from direct to indirect involvement. Under this regime, the state prescribes the necessary legislative and regulatory support in the form of formulation of policies and engagement in institutional reforms, while leaving actual housing provision to the private sector, NGOs, communitybased organizations and individual households (World Bank, 1993). This policy, in effect reflects an anti-welfarist economic model that is characterized by a shift from state concern with welfare to protection of individual autonomy (Culpitt, 1999). Moyo (2004) explains that in a welfarist regime, the state has a moral responsibility to supply adequate and affordable shelter to its citizens and intervene via subsidies and regulation to moderate the inequalities resulting from the workings of the market. In a neo-liberal regime, however, every service is a commodity for which the market sets the price and the state is limited to a facilitative function as the provision of housing is left to the market. The obvious implication of this to housing is that low-income housing provision, traditionally borne by the state is being shifted to the market. In this scenario, financing low-income housing is perceived not only as comparatively unprofitable but also carries negative elements such as mortgage defaults. Since the basic philosophy underlying the housing market operations is full cost recovery with a reasonable profit, major financial and institutional players therefore shun the housing market (Moyo, 2004). In contrast with the Nigerian state that is operating a neo-liberal, market-based housing policy that has failed to provide adequate and affordable housing, things have been quite different elsewhere: a combination of the neo-liberal and socialist housing systems is working well in Singapore with great results (Chin, 2004; Phang, 2010); a corporatist regime in Netherlands is providing medium and high density mass social housing through both market and non-market institutions with widespread state support, comprehensive government regulation and a high rate of public investment (Milligan,2003); Australia has a neo liberal housing and urban policy practice of mass home ownership and low density suburbanization through publicly supported market allocations, supplemented by a small, administratively managed public housing system (Milligan, 2003). The case of Singapore is particularly significant and remarkable. The government of Singapore directly provides a majority of the housing stock through a Housing and Development Board (HDB) which in 2009 had built 884,000 units housing about 78 percent of the population, while the private sector provided only 249,000 units representing 22 percent (Phang, 2010). Yuen (2007), reports that the housing policy is anchored on the goal to maximize the housing options of poor residents while guarding against exclusion, exploitation, and unsanitary living conditions. This policy is crystallized on two basic functions of the HDB: the state as a provider of housing and at

the same time encouraging citizens in the lower middle income group to own their own homes. The housing system embodies aspects of both a free-market and a socialist system: the HDB is supported by public funds, yet is essentially a private developer. While the HDB is responsible for the provision of most housing, the market determines the sale and rental prices of the housing units under the supervision of the Ministry of National Development. This strategy avoids the pitfalls of market-dependent systems where housing prices are beyond the reach of a majority of the citizens or of the socialist systems where the absence of capital returns stultifies further provision of public housing (Chin, 2004). The economic success of the Singaporean housing development model is attributable to the governments strong commitment to the housing sector and the integration of housing into an overall economic development programme. The implementation of effective policies, through the HDB, to deal with other key variables, such as availability of land and finance has also accelerated the production of housing. Phang (2010) summarizes the reasons for the phenomenal success of the housing system thus: competent public sector; competitive public pay; zero tolerance for corruption; merit based hiring; and a philosophy of economic growth through housing provision with the helping hand of government creating and enabling markets to work more efficiently. The story of the Singaporean housing system is an interesting instrumental case study on how the state, the private sector, government institutions and the households themselves can collectively deploy the components of housing production to effectively produce low-cost, affordable housing on a mass scale. It is interesting to note that the present-day success evolved out of the same problems of inadequate finance, lack of professional manpower, lack of industry capacity and other conditions that still plague other developing countries today. Overall, this proves that there is a thin line between success and failure of any housing system. The bottom line is sincerity and commitment.

Urbanization Trends in Nigeria Nigerian cities, as elsewhere in sub-Saharan Africa, are experiencing rapid urban population explosion. Table 1 shows the percentage of the population of Nigerians living in urban areas with more than 20,000 people. An analysis of the figures shows that there is a dramatic increase in the population of Nigerians living in urban centers, from 4.8 percent in 1921 to 52 percent in 2010. In this instance, the areas represent less than 10 percent of the land area of the country and yet accommodate more than 50 percent of the total population. This trend is also noticeable in the population growth rate across cities. While the overall population growth rate is 3.2 percent, that of a city like Abuja is 9.8 percent, moving from a population of 371,674 in 1991 to 1,406,239 in 2006 (Federal Republic of Nigeria, 2007).

Table 1. URBAN POPULATION IN NIGERIA (1921-2025) Year 1921 1931 1953 1963 1973 1983 1991 1996 2000 2010 2015 2020 2025 Total population (in millions) 18.63 19.93 30.30 55.65 79.76 84.70 88.50 102.52 128.80 168.40 190.90 214.50 238.40 %Rural 95.2 93.3 90.0 80.8 78.0 75.0 68.0 60.0 56.0 48.0 44.9 41.8 39.1 %Urban 4.8 6.7 10.0 19.2 22.0 25.0 32.0 40.0 44.0 52.0 55.1 58.2 60.9

Source: Federal Office of Statistics, 1963 and 1970

The urban centers in Nigeria are not evenly spread across the geo-political regions. This can partially be explained by the fact that urbanization process in Nigeria, as in other parts of the world, is a function primarily of trade, politics and administration. In advancing this point of view, Jones (2011) notes that many urban centers in Nigeria were originally established only at vital nodes of the transport infrastructure constructed to

enable the export of mineral wealth and agricultural produce to Europe and at European administrative and residential centers. Coastal cities such as Lagos, Badagry, Brass, Bonny and later Calabar and Port Harcourt served as commercial and trading posts and therefore tended to have high population densities. In a similar vein, the excessive reliance on imported raw materials by the Nigerian industrial sector also encouraged the over-concentration of industries and urban development in coastal cities like Lagos and Port Harcourt because they have access to sea ports that facilitate the importation of the raw materials (Ilesanmi, 2009). The northern savannah cities of Kano, Kaduna, Sokoto, Zaria etc also grew in a similar way serving also as political capitals for the expanding states. In every region, the situation is the same except the vast middle belt region which have much lower levels of urbanization (Nwaka, 2005). Attempts by the successive federal governments to balance urban growth and maintain a fair distribution of urban places of different sizes in the different parts of the country were perhaps the motivation for decentralizing the political and administrative structures of the country. This process started with the change from the regional set up to the 12state structure in 1967 and then ultimately to the current 36-state structure and the Federal Capital Territory (FCT), Abuja (Sule, 1982). Recently, the 36 states and the FCT were divided into 6 geopolitical, non-administrative zones namely: North-Central, North- East, North-West, South-East, South-West and South-South zones (see Table 2 and Figure 1). In spite of these attempts to pursue an even and widespread urban development programme, there persists an imbalance in urban growth concentrations or city clusters (DFID, 2004). Uyanga (1982) observes that one of the major reasons for the persistence of the imbalance is the lack of a National Urban Policy programme. In all the National Development Plans, little attention was paid to urban and regional planning, rather the government chose to treat urban and regional planning as an appendage of economic planning (Uyanga, 1982). Since independence, the discovery and commercial exploitation of oil and natural gas resulted in large scale urban development projects such as roads, infrastructural facilities, housing development and environmental transformation of urban centers. During this oil boom prosperity of the 1970s, Nigeria had possibly the fastest urbanization growth rate in the world (Olayiwola et al, 2005a). Taylor (2000) reports that the massive improvements in housing and other facilities were concentrated in a few urban centers like Lagos, Port Harcourt, Kaduna and Sokota and these cities had growing manufacturing sectors, a great variety of small business enterprises and post secondary education installations. The most unfortunate situation in this skewed development strategy is that the towns and areas where the oil explorations are taking place were completely neglected and/or abandoned. The above situation means that the vast majority of salaried jobs were concentrated in the urban centers. Owing to the natural imbalance between the few developing urban centers and the vast undeveloped, neglected and exploited regions of the country, many rural dwellers migrated to the few urban centers (Olayiwola, 2005a). As even greater numbers of people migrated to the small number of rapidly expanding cities, the fabric of life in the urban centers changed in major and unforeseen ways. The cities shot up in size, housing construction boomed, but rarely kept pace with demand leading to rapid decline in the quality and quantity of city services. The existing poor level of city development

and state unpreparedness aggravated the shortage of dwelling units resulting in overcrowding, high rents, squatter settlements, disease and crime (Aluko, 2004). The ultimate effect of the acute shortage of housing is the creation and expansion of unorganized and informal settlements generally known as slums. Rather than tackle the problem, the government initially regarded them as a transition phenomenon that would gradually fade away with economic development. Over time, when the slums refused to go away, the government embarked on slum clearance rather than slum upgrading. The net result is that slum districts in urban areas and prime cities swelled as economic development pushed more poor people out of the unaffordable formal housing and land markets (Hardoy and Satterthwaite, 1989). A major flaw in the Nigerian housing policy is identified as the perception of what housing is and its role in the economy. Housing is often regarded as a social cost in Nigeria instead of a productive investment and thus housing has always been treated as a social good that must be distributed as a form of political patronage or public largesse (Nubi, 2007). Choguill (1995) reports that in the developing countries, the housing sector is also seen as an unproductive sector that requires little or no attention by the governments, hence the neglect the sector has experienced over the decades. Such a climate of neglect further aggravates the urban housing crisis and brings about a sharp decline in the housing stock for low-income households causing higher stress in the existing substandard settlements. The acceptance and implementation of the World Bank enabling housing strategy in the last two decades led to the concentration of efforts on the formal, private housing markets, a process advocated by the strategy. Although the strategy has its advantages, it also inadvertently led to the exclusion of other complementary and alternative public, cooperative/community based and informal modes of housing provision from serious policy considerations (Keivani and Werna, 2001a). From the literature, it seems the idea of moving the Federal capital away from Lagos to Abuja indeed represented a positive development in decongesting the city of Lagos as well as stimulating the socio-economic development of the then middle-belt now known as the North-Central zone, which has been lagging behind in development indices. Unfortunately, the noble objectives have not been fully realized and the study strongly believes that creating an articulate and responsive National Urban Policy will provide the framework for relating the urbanization process to the general national industrial and economic development goals that will propel Nigerian cities to fulfill the purposes expected of modern urban centers. This policy is also expected to provide the enabling environment for the establishment, distribution and control of urban centers to attract industry away from the already congested cities toward other less affluent areas where a wave of new employment will be generated. The study also believes that a new policy is required in the housing sector specifically, that understands local conditions and can combine complimentary modes of formal and informal housing production and supply systems in order to overcome their relative weaknesses and ultimately boost housing supply especially to the urban poor.

The Concept of Housing Affordability Housing affordability will always be of a central concern for any good government that cares for the welfare of its people, especially with increasing disparities in incomes and housing costs (Berry et al., 2004). When housing costs increase in relation to household income, the problems associated with poor affordability tend to become more accentuated (Burke et al., 2007). Whitehead (1991) notes that the issue of housing affordability has also become critical due to government disinvestment in public housing and replacement of public housing mechanisms with market driven systems. This has inevitably drawn the attention of many policy makers within the housing sector and pushed the concept of housing affordability into the center of policy discourse and widespread usage in the last 20 or so years (Ndubueze, 2009). The concept of housing affordability gained ascendancy in housing policy issues in the 1960s and has recently become a common way of summarizing the nature of housing problems and needs in many nations (Gabriel et al., 2005). The term is used widely in evaluations of the impact of the cost of housing on consumers but with a number of different meanings and measures (Milligan, 2003). The most general use of the term however centers around consideration of the extent to which housing costs for a given standard of housing affect household income and the capacity of the household to meet the total household needs (Hancock, 1993). In the period of its initial formulation, a household is said to have a housing affordability problem when it pays more than 25 percent of its income to obtain adequate and appropriate housing (Hulchanski, 1995). This measure of affordability has been evolving over the years. According to Kutty

(2005), the measure was 25 percent of income until the early 1980 and 30 percent since then. In practice, however, the ratio differs for different income groups: higher income groups pay much less proportion of their income on housing than the lower income groups. Konadu-Agyemang (2001) notes that the idea that no more than 25 percent of a households income should be spent on housing may have developed out of conventional wisdom and local experience that housing costs are normally around a quarter of households income. This was believed to be the maximum people could spend on housing without jeopardizing their ability to acquire other life essentials. The 30 percent, according to Hulchanski (1995) is more or less a rule of thumb that was set primarily by private market requirements and does not recognize household types nor the trade-offs that can be made by a household. The rationale for such a benchmark therefore reflects historical and philosophical judgments rather than evidence-based technical reasons (Burke, 2003). The 30 percent of household income, when translated to a ratio, results in what is commonly known as housing expenditure-to-income ratio. Gilderbloom (1985), reports that the housing expenditure-to-income ratio was used in the early 20th century by mortgage lenders and later by private sector landlords in North America as an appropriate indicator to predict a households ability to pay the mortgage or rent. It was also based on some rough judgment of what an average low-income worker spent on rental housing (Burke, 2003). The 30 percent of income measure of housing affordability is now the most frequently cited standard and defines a unit of housing as unaffordable if a household would have to spend more than 30 percent of its gross income on housing and utilities (Feldman, 2002). Although some authors, Quigley and Raphael (2004) for

example, warn that the housing expenditure-to-income ratio can be a misleading measure of housing affordability, others believe that in spite of its shortcomings it is a useful starting point in understanding the possible meanings of the concept of affordability (Gabriel et al., 2005; Hancock, 1993). The term, affordable housing came into widespread popular usage in the 1980s when governments around the world started adopting neo-liberal modes of housing provision as part of the retreat of the state from public responsibility for the plight of the poor (Stone, 2006). It was also a period when housing affordability challenges moved up the income distribution and was no more limited to the low income earners (Stone, 2006). This move, according to Fallis (1993), was influenced by the enabling markets approach, which was then promoted by the World Bank and its allied researchers. The enabling markets housing policy is a strategy in which the state is expected to concentrate on policy formulation and institutional reforms while leaving actual housing provision to the private sector, households, community-based organizations and NGOs (Takahashi, 2009). The enabling markets approach (World Bank, 1993) which encouraged the increasing adoption of more market-oriented reforms of various aspects within the housing sector in many countries was embraced due to the poor results of highly subsidized housing programmes that attempted to replace the market and the limited impact of sites and services and slum upgrading projects (Fallis, 1993). The entry into the housing market of a large share of the worlds population in China and the newly independent states of Eastern Europe soon after the fall of the Soviet Union also played a key role in the emergence of the enabling markets approach (Freire et al, 2007). Quigley and Raphael (2004) note that the emergence of housing affordability as a policy

problem and a major concern to the public arises from two major reasons: the rising house prices which often place social and economic pressure on lower income households and the fact that housing is the single largest expenditure item in the budgets of most families and individuals and comprises the main share of both household assets and debts. In recent times, the familys housing budget has been estimated to be between two and three times the annual family income (OSullivan, 2003). From the literature, it follows that small changes in housing prices will have large impacts on household welfare. Owing to this precarious state of affairs, Feldman (2002) therefore expresses the concern that the critical issue is not necessarily the rate at which housing prices are increasing but instead the reduced levels of spending on other basic necessities. Other related concepts used in the context of housing affordability are housing accessibility and housing stress. Housing accessibility reflects the initial conditions facing a potential tenant or owner (Robinson et al, 2006). The conditions include income, housing supply constraints, interest rates, house prices, rents, mortgage criteria and government housing policies that may make a purchase or rent more accessible or otherwise. In other words, a person for whom housing is unaffordable is in effect lacking access (Robinson et al, 2006). Housing stress, on the hand, encompasses the ways in which households experience affordability problems (Gabriel et al, 2005). It denotes the negative impacts for households with insufficient income to secure adequate housing and may include other factors such as overcrowding, insecure tenure, unsafe or inaccessible locations.

Defining Housing Affordability In assessing the utility of defining housing affordability, Whitehead (1991) reasons that because market failures have caused the housing market to deliver affordability outcomes that are deemed unacceptable to society, suitable definitions of what is regarded as affordable need to be developed to facilitate policy formulation and operational interventions in the market. Housing affordability is often expressed in terms of affordable housing (Stone et al, 2011) and as Nubi and Afe (2011) note, affordability is fundamentally what is needed to transform abstract housing thoughts into tangible assets. In this context therefore, housing will remain an illusion in the absence of needed financial resources. In effect, housing costs and household income will inevitably play a central role in any definition of housing affordability. Housing costs are generally defined in the literature as purchase costs, recurrent mortgage repayments, rates, taxes, household insurance, repairs and maintenance for owner purchasers and rental payments for renters (Milligan,2003; Gabriel et al, 2005). It will be recognized also that definitions ultimately involve value judgments not only about quality and attributes of housing but also about the relationship between housing expenditure and household income. In whatever way housing affordability may be defined, all housing will be affordable for some people, no matter the price while for others no housing will be affordable unless it is free (Stone et al, 2011). In this regard therefore, housing affordability tends to be more of a problem for low income households. Some researchers however see the issue as one that cuts across all income groups (Berlin, 2010). It is also important to remember that housing

affordability spans the full range of housing tenure types, including private home ownership, private rental and social housing (DTZ Research, 2004; TNZPC, 2011).

In a simple term affordable housing means housing with a sales price or rental amount that is within the means of a household that may occupy such a unit of housing (Ndubueze, 2009). It conveys a notion of reasonable housing costs in relation to income. Households can be said to afford their housing costs if those costs do not extract an unreasonable share of the household budget, leaving the household with sufficient income to meet other needs (NHS, 1991: 3). In this context therefore, housing affordability implies a households ability to afford housing and its capacity to exercise choice in the marketplace. It describes the social and material experiences of households in relation to their individual housing situations (Stone, 2006). According to Stone et al (2011) housing affordability is not an inherent characteristic of a housing unit but rather a relationship between housing and people that is often expressed in terms of incomes and relative prices. Housing affordability is commonly defined by the relationship between a households housing expenditure and household income (Davenport, 2003; Freeman et al, 1997; Whitehead, 1991; Linneman and Megbolugbe, 1992). It seeks to establish a standard in respect of which the amount of income spent on housing is deemed affordable or unaffordable. Typically, households that spend more than 30 percent of their income on housing are defined as being in housing stress, although the level at which this benchmark has been set has varied over time (Gabriel et al, 2005: 11). Affordability expresses the challenge each household faces in balancing the cost of its actual or potential housing, on the one hand, and its non-housing expenditures, on the other, within the constraints of its income (Stone, 2006: 151). In sum, housing affordability is a

function of two main variables: capital variables (house purchase costs) and occupation variables (costs associated with keeping the house). Figure 5 outlines the components of housing affordability for households. A change in any of these factors will therefore have a direct impact on affordability (TNZPC, 2012). The relationship between housing costs and incomes can often be computed as a ratio or a difference (Stone et al, 2011). The mathematical methods that result from these form the basis for the prevailing ratio and residual affordability approaches. In addition to these two fundamental approaches, Stone et al (2011: 15) have identified and clarified four other approaches to defining housing affordability or the lack thereof. In all, there are six approaches: Categorical: statements of ability or inability of households to pay for market housing that are not grounded in any reference point. While hinting at the causes of affordability problems, such statements fail to provide any real measure of what it means. Relative: comparing affordability to track whether affordability (however it is measured) has improved or declined over time. In this context, there is no absolute measure or standard (such as the usual 30 percent), but rather affordability compares the present with the past, with a lower index indicating lower affordability and vice versa. The relative approach, widely used by the mortgage lending and real estate industries to assess the affordability of the residential sales market, serves a useful descriptive purpose, but provide no independent normative standard and use no distributional data for assessing how many and which kinds of households can and cannot afford which properties that

are for sale. Subjective: whatever individual households are willing or choose to spend on housing. This approach assumes that the concept of affordability of whatever commodity is essentially subjective and that households are rational utilitymaximisers. Every household therefore pays just what it can afford for housing. It could be discerned from this perspective that housing affordability has no generalisable meaning other than individual choice.

Family budget: monetary standards based on aggregate housing expenditure patterns. This approach conceptualizes affordability standards on a combination of normative judgments and summary measures of what households in the aggregate actually spend. This has formed the basis for the ratio approach and also provided the basis for the budget standards approach of a standardized monetary amount for housing. In sum, this approach involves specification of essential items and the pricing of the physical standard of each item. The prices are then summed to yield a total minimal budget. Ratio: maximum acceptable housing cost/income ratios. This approach is an indicator for expressing the relationship between housing costs and incomes and usually specifies an explicit ratio of housing cost to income as a standard against which households actual circumstances can be measured. A household that pays more than this percentage or fraction of its income on housing may not have enough left for other necessities and is therefore deemed to be in housing stress. Residual: normative standards of a minimum income required to meet nonhousing needs at a basic level after paying for housing. The approach focuses on

the relationship between housing costs and living standards by measuring disposable income remaining after housing costs. This approach therefore recognizes that non-housing expenditures are limited by how much income is left after paying for housing. In this context, a household has a housing affordability problem if it cannot meet its non-housing needs at some minimum level of adequacy after paying for housing. The minimum level of adequacy means that a residual income standard involves the use of a socially-defined standard of adequacy for the non-housing items. A survey of literature indicates a variety of approaches on how the concept of housing affordability should be defined and measured (Ambrose, 2005; Stone, 1993; Quigley and Raphael, 2004). To some degree, the lack of consensus among academics and housing experts on the conceptualization of housing affordability reflects the different priorities and assumptions of researchers and institutions with different disciplinary backgrounds and objectives (Gabriel et al, 2005). While sociologists generally focus on concerns about social inequality, household experiences, housing need and supply, economists frame their definitions based on incomes, costs, housing finance and consumption. Gabriel et al (2005) opine that the contested nature of housing affordability can be linked to different understandings of its root causes and drivers especially as they relate to inadequate family incomes or inadequate housing. This has resulted in the assumptions that lack of housing affordability is primarily a problem of poverty on one instance, while on the other a problem of housing poverty or lack of available affordable housing (Grigsby, 1990). The two predominant approaches to housing policy issues: demand-side and supply-side instruments such as targeted housing subsidies and the provision of

social housing and planned development respectively are based on these two different perceptions of what affordable housing is supposed to be. This is absolutely in line with the maxim that defining a problem in different ways will obviously result in different solutions. There is also a difference in the concept of housing affordability as it applies to the socialist and capitalist economies. Konadu-Agyemang (2001) explains that in the socialist countries, any rent above 4-6 percent of the family income is considered excessive, whereas in the capitalist economies, a monthly rent or mortgage payment above 25-30 percent of the tenants or mortgagees monthly income is deemed as unaffordable. In the same vein, Linneman and Megbolugbe (1992) emphasize that the conventional measures of housing affordability present many problems as they do not control for changes in the quality of housing stock over time and the relationship between median home prices and median income does not account for the actual financial constraints faced by households. They therefore posit that talk of housing affordability is plentiful, but precise definition of housing affordability is at best ambiguous. The lack of consensus on how to accurately define the concept led Maclennan and Williams (1990) to suggest that researchers and policy makers should either clarify the meaning of the term or stop using it. One of the earliest definitions of housing affordability is by Howestine . Howestine (1983) defines housing affordability as: the ability of a household to acquire decent accommodation by the payment of a reasonable amount of its income on shelter (cited in Wong et al, 2010: 4). Similarly, Hulchanski states that a household is said to have a housing affordability problem, in most formulations of the term, when it pays

more than a certain percentage of income to obtain adequate and appropriate housing (Hulchanski, 1995: 471). Both definitions capture the ability of households to pay without reference to the dwelling occupants or trade-offs to be made. They allude to household income and housing costs as important elements of affordability without specifying the appropriate values that an indicator should take or not exceed: reasonable amount of its income and a certain percentage of income. Both definitions are also concerned with the standard of housing consumption. While Howestine speaks of decent accommodation, Hulchanski speaks of adequate and appropriate housing. Putting these elements together, affordability considers not just housing alone but also the quality of housing consumed by households. Zacchaeus 2000 Trust (2005) offers a rather more comprehensive definition that includes components of adequate residual income. It states that once necessary payments on rent or mortgage (including service charges and council tax) have been made, be the household an individual, a family or people of pension age, there remains sufficient income to sustain safe and healthy living, support the needs of any children of the household at school and participate in the life of the community. Unaffordable housing means that the residual income left after all housing costs have been met is not sufficient for these purposes (cited in Ambrose, 2005: 172). This definition also brings to the fore the issue of opportunity cost of housing which Hancock notes is clearly the essence of the concept of affordability: what has to be foregone in order to obtain housing and whether that which is foregone is reasonable or excessive in some sense (Hancock, 1993: 129). The definition steps beyond conventional formulations based on percentage of income spent on housing to include considerations of the capacity of the households to meet non-housing costs. Put differently, any housing is affordable

which leaves the consumer with a socially-acceptable standard of both housing and nonhousing consumption after all housing costs have been met. Maclennan and Williams offer the following definition of housing affordability: affordability is concerned with securing some given standard of housing (or different standards) at a price or rent which does not impose, in the eyes of some third party (usually government), an unreasonable burden on household income (Maclennan and Williams, 1990: 9). In addition to addressing the issue of proportion of income on housing costs, the above definition appears to have also raised the issue of housing quantity and quality consumed by households and by extension, overcrowding. The concern with an unreasonable burden on household income may imply a consideration of the capacity of households to meet both their housing and non-housing costs, thereby maintaining adequate housing and an adequate standard of living. By speaking of some third party, it also alludes to some social and societal minimum and desirable expectations. Bramley (1990) offers yet a definition that gives more clarity to the concept of housing affordability. He states that households should be able to occupy housing that meets wellestablished (social sector) norms of adequacy (given household type and size) at a net rent which leaves them enough income to live on without falling below some poverty standard (Bramley, 1990: 16). As observed by Hancock (1993), the definition conceives of some quantity of non-housing consumption that society regards as socially desirable minimum which Bramley describes as a poverty standard. The definition again goes beyond housing costs and income ratios to include household composition and spatial variation.

Thalmann (2003) gives a specific and simplified definition in the following line: housing is not affordable for a household if it excessively crowds out other expenditures. Within the varied definitions of housing affordability from the literature, housing costs/rent and household income emerge as the core components of any definition of housing affordability. These elements and others like the labour market conditions that affect a households ability to earn an income and interest rates that affect the costs of borrowing, when combined constitute the factors that affect and determine housing affordability. The complexity surrounding housing affordability means there will be different perspectives on the way the term is defined and operationalized in different nations. The nature of the housing system within particular nations, economic and demographic trends, inherited policy settings, orientation of policy reforms, political interests, fiscal constraints and broad economic and social goals (Gabriel et al, 2005; Stone et al, 2011) contribute in shaping the housing affordability policies. In this regard therefore, Disney (2007) suggests that the term should be used in a way that will be compatible with appropriate policy goals and involve reasonable criteria relating to physical aspects of the housing and its environment. Accordingly, Disney (2007) specifies that households should occupy housing which: a, is reasonably adequate in standard and location for a lower- or middle-income household and b, does not cost so much that such a household is unlikely to be able to meet other basic living costs on a sustainable basis. In order to operationalize the housing affordability definitions in different policy contexts, policy makers and stakeholders have adopted various institutional arrangements

aimed at improving homeownership and making rentals more affordable. The result is that while some governments have focused on demand-side approaches such as rent assistance and subsidies above the use of urban planning instruments and market mechanisms, others have laid more emphasis on supply-side approaches such as the provision of social housing. However, opinions differ on the effectiveness and outcomes of the instruments. In a research conducted by Katz et al (2003), they found that mixed approaches to housing affordability are required, with the particular combination of programmes varying according to the economic and social environments. Pomeroy (2004) similarly observed that providing housing subsidies alone would not address the lack of new housing supply that is the major cause of rising rents and worsening affordability. In sum, the literature suggests the adaptation of a more diverse, marketoriented and encompassing approach that would respond adequately to growing poverty, declining wages and inadequate housing supply.

Drivers of Housing Affordability Problems?

The affordability of housing is largely determined by the costs of producing and financing housing and the income levels of households at a given time (Milligan, 2003). A combination of factors both within the housing system (including housing policy interventions) and beyond it (including labour market relations) influence both the housing costs and the household income. Although local, state, national and international economic, social and political issues impact on housing affordability, house prices serve as the primary driver of housing affordability, determined by the interaction of the above factors (Worthington, 2011). Other demand and supply side contributors to the worsening housing affordability crisis include: demand side factors changing demographics (age, structure, household size) that increases housing demand especially in urban centers; population growth (including migration); housing types that are not always reflective of the changing demographic profile; under-developed housing finance systems that cannot give mortgage credit at a reasonable rate and the interest rates that fuel house price appreciation; labour market changes that impact on the households ability to participate in the housing market and the increased casual and insecure employment that generate income insecurity and low wages/ salary rates; housing design and quality preferences (preference for home-ownership and the trend toward the construction of larger individual houses); social exclusion: consistent differentiation of the housing situation by tenure, location and generation giving rise to socio-spatial polarization and segregation; property is often considered as an investment instrument and sometimes this leads to price speculation. Demand may therefore become excessive if people develop unrealistic expectations about the returns from housing investments relative to other investments. In this sense, the investment perception of housing predominates over the consumption aspect;

government measures aimed at subsidizing the cost of housing such as tax concessions, rent law and government assistance for home owners actually help to increase prices in the private housing market. Low household incomes that lead to inability to meet housing costs or save to purchase a house;

Supply side factors land-use regulation and costs associated with the preparation of development applications; holding charges caused by delays in approving land for future development; shortages of skilled labour and poor management capability; higher costs of compliance caused by increased environmental and regulatory requirements; lack of innovation in the building industry: construction is still done the way it has always been done - this means a labour intensive approach to residential construction. Most of the work is still carried out on site rather than by assembling prefabricated materials that have been manufactured off site. absence or loss of low cost housing stock for both rent and to buy; insufficient supply in the one and two bedroom sub-market; insufficient supply of construction finance and high interest rate on construction loan; policies that restrict land supply thereby increasing land values which is having a marked impact on housing affordability; containment of new developments in urban centers without providing adequate development opportunities for new development at city fringes or virgin land; substantial increases in housing-related infrastructural charges; increases in taxes and other charges including the withholding tax;

market-state relations: changes in the housing roles assumed by governments and the retraction in the role of the welfare state in housing policy. (Hulchanski et al, 2004; Lawson and Milligan, 2007; Yates et al, 2007; Ambrose, 2005;

Feldman, 2002; NZPC, 2011; DTZ Research, 2004; Darmanin, 2008). The study examines, in detail, some of the major trends that have a significant and detrimental impact on affordability: Changing Demographic Structure. Changes in population and household profiles are key to understanding housing need and demand. Population changes affect the housing market, influencing demand and supply of housing. The underlying demand for housing is primarily driven by household formation which reflects population growth and changes in household size (Whitehead et al, 2009). Changes in household characteristics such as age, size and structure and household preferences also have long term effects on housing demand and prices (Lawson and Milligan, 2007). NZPC (2011) observes that household formation has been increasing faster than population growth owing to these changes in household size and composition especially the preference for smaller households. A decline in the average size of households (equivalent to a fall in the number of persons per dwelling unit) results in an increase in household numbers with a resultant increase in housing demand and prices. According to Lawson and Milligan (2007), the growth in household formation is also as a result of a decline in the proportion of households made up of couples with children and an increase in the share of couple-only households. Also included in the growth is the formation of more single person households as a result of ageing and delayed marriage. Other related factors are the increasing number of single parent families that are created due to increased marital break-up and declining fertility rate that increases the number of families without children (Ambrose, 2005).

Escalating house prices. Housing costs generally have an impact on the ability of households to access affordable and sustainable housing. They set the price and payment

levels required to either purchase or rent houses. DTZ Research (2004) reports that higher housing costs add to the upward pressure on rents and as housing costs increase, the cost of home ownership also increases. Some of the factors that affect housing costs include higher building material prices, constraints on the supply of buildable land, increased developer levies ostensibly to fund infrastructure, higher building standards, shortages of skilled labour and property-related taxes (Burke, 2001). Low household incomes. Income plays a fundamental role on housing affordability because it determines a households ability to pay for housing. Because housing cost is one of the largest expenditure items in household budgets, low incomes lead households to spend most of their income on housing and this results in such households having barely enough after to pay for other basics (Feldman, 2002). Low incomes, in relation to housing costs, force poor families to compromise the standard of their housing in ways that seriously undermine their quality of life. Consequently, they congregate in areas with low quality housing, inadequate infrastructure and widespread poverty, forcing these areas to decline into slums. As Linneman and Megbolugbe (1992) report, affordability problem is primarily income related and only partly due to inadequate housing supply. Constraints on land supply. The constraints on land may be environmental or topographical and may result from inappropriate zoning, lack of infrastructure, or lengthy building approval processes (Brownlee, 2008). The supply of new housing may be unduly slow due to inefficiencies in government regulation such as delayed land release or planning and consenting constraints (NZPC, 2011). DTZ Research (2004) finds that housing has to compete with other land uses especially for housing close to central business districts, transport hubs and city centres. The reduced housing access resulting

from the constraints increases the cost of residential land. The rising cost of land, especially in urban centres, is therefore a major reason for the decline in the supply of new housing. There is also political and community opposition to urban expansion into rural areas as well as an increase in speculative land holding, following the liberalization of land development. Absence or loss of low cost stock. The loss of specific types of housing like low cost private rental apartments, social housing or government-subsidized housing and boarding housing causes declining housing affordability (Burke, 2001). Social housing production has declined considerably due mainly to higher land costs, corruption, high construction costs, planning system factors, regulatory constraints on rent and the withdrawal of government from the production of housing. Major changes in government financing, land release and urban planning policies toward a more privatized system of housing supply have also contributed to the decline in housing supply (Lawson and Milligan, 2007).

Measuring Housing Affordability When a household procures and consumes housing at a given cost it places a burden on

its income. The ratio of the housing cost to income provides a measure of the burden placed on that household (Rowley and Ong, 2012) and involves comparing housing costs to a households ability to meet those (Engeland and Figueroa, 2008). Housing affordability measures quantify the extent of discrepancy between the current housing expenditures of households and what they are expected to spend given their consumption needs (Bogdon and Can, 1997). But how one defines and measures housing affordability matters to policy making as well as public perception of the scope and nature of the problem. The literature shows that the concept of housing affordability is complex and considerable disagreement exists among policy makers and researchers on how best to define the various elements of housing affordability and the differing circumstances of individual households. As a result, differing measurement approaches emphasizing different elements of the concept have been developed over the years (Ndubueze, 2009). Which measure is used depends on the purpose established by each researcher given that different methods are based on different assumptions and therefore yield different results (Burke and Ralston, 2003). These measures and their corresponding indicators can be used for several purposes: as a criteria in the decision to provide a mortgage; for problem identification; measurement of performance of public and private housing systems; assessment of the financial wellbeing of housing consumers and recipients of housing assistance in particular; assisting housing industry decision making; facilitating identification of the type of policy options to address housing affordability; and guiding the actual provision of affordable housing (Gabriel et al, 2005; Burke, 2003).

Affordability measures are shaped by various technical and methodological issues which

affect their outcomes. These are identified and discussed in the literature (Abelson, 2009; Gabriel et al, 2005; Darmanin, 2008), with an extensive analysis in Gabriel et al (2005). They include definition, measurement variables and methodological constraints. A definition of what housing affordability conveys must be given as a useful starting point to illustrate the critical relationships involved. Some writers in fact assume that the broad meaning of housing affordability is self-evident and that it can be defined in terms directly linked to measurement (Chapman, 2006). Issues relating to the variables used to measure affordability should also be clarified. Some of the decisions to be made about the variables involve: the measurement of household income (private income or disposable income and whether these should be adjusted for household size); the components of housing costs; the unit of analysis; the composition of a household; the treatment of locational and spatial factors that affect commuting costs and level of services; the choice of time period over which any definition of housing affordability should apply; non-housing costs; the choice of benchmarks; housing adequacy; and the treatment of housing assistance and subsidies. There are also concerns about the quality of survey data that is used in both the ratio and residual approaches. In this regard, Gabriel et al (2005) suggest that methodological constraints should be addressed and a researcher must note that: measures are dependent on large secondary data sets that include data on both income and costs; different data sources have different strengths and weaknesses; there is limited understanding of the way in which income is shared within household units with no measure accounting for variation in the affordability burden of individuals within the household; the capacity to understand how affordability affects individual households over their lifecycle is

constrained by the fact that every survey covers a different set of household and almost all affordability analysis is static in that it captures the situation at the time of data collection. There are two main approaches to measuring housing affordability in housing research: the ongoing costs measures and the access affordability measures (Gabriel et al, 2005). The ongoing costs measures are the most widely used and are classified into two main groups. The first is referred to variously as the ratio measures, proportional measures or the housing quota, wherein affordable housing costs are set as a fixed proportion of income within set income bounds (Karmel, 1998; Landt and Bray, 1997, Boelhouwer and Menkveld, 1996). The second group in the ongoing costs measures of housing affordability is referred to as the residual measures, wherein affordable housing costs are set as a fixed amount that does not vary with income level. Residual measures are also known elsewhere as the living standard measures, non-shelter first or after poverty measures (Karmel, 1998; Milligan, 2003; Burke et al, 2004; Stone et al, 2011). The access affordability measures attempt to capture the changing supply constraints and the access and affordability barriers households confront. They tend to focus on the individual and households ability to achieve home purchase or rent an apartment by drawing attention to the levels of income required for the purpose. The accessibility/deposit gap approach is an example of the access affordability measures.

The Ratio Measures The ratio measures are the dominant and most commonly used measures of housing

affordability. They express defined housing costs as a proportion of household income and relate this proportion to selected standards of affordability (Milligan, 2003). A ratio approach asserts that if a household pays more for housing than a certain percentage of its income, then it will not have enough left for other necessities. Typically, a benchmark (25% or more) of household income is specified against which households actual circumstances can be measured (Stone, 2006). A dwelling is thus deemed affordable for a specific household if housing costs as a percentage of household income are below the benchmark, otherwise it is unaffordable (Henman and Jones, 2012). There are two major variants of the ratio measures: House price-to-Income ratio for assessing the housing affordability of home buyers and Rent-to-Income ratio for assessing the housing affordability of rental households.

House price-to-Income ratio A house price-to-income ratio is the ratio of average or median house prices to average or median gross or disposable household income in a given geographical area (Linneman and Megbolugbe, 1992). The ratio is used as one measure of trends in housing affordability of owner-occupation over time. It gives some indication of difficulty or otherwise in accessing the housing market. More commonly, the ratio approach looks at the ability to repay a mortgage on becoming a home owner and is concentrated around individual or household income, mortgage, house price and loan data (Duffy, 2004). This is why many mortgage credit institutions rely mostly on this type of measure in their risk assessment of potential customers. As an indicator for expressing the relationship between housing costs and incomes, the ratio is widely used by a variety of academics and analysts and has the longest history. This approach generally specifies an explicit

ratio of housing cost to income as a standard against which households actual circumstances can be measured (Stone et al, 2011). Over time, thresholds of the housing price-to-income ratio have been set between 25 percent and 30 percent, but generally a housing cost burden of up to 30 percent of income is defined as affordable (Linneman and Megbolugbe, 1992). Darmanin (2008) asserts that this idea underlies the common practice of mortgage lenders advising borrowers against exceeding 30 percent of their gross monthly income on monthly mortgage payment. As house price is a key determinant of homeownership affordability, rising house prices not only impede the ability of prospective buyers to pay the required deposit, but also push up the monthly mortgage payments. As a result, buyers must have higher income to meet the qualifying criteria which is put at about 3.5 to 4.0 multiple of mortgage payment (Ndubueze, 2009). However, Feins and Lane (1984) believe that based on calculations converting 25 percent income into selling price of a house, the standard rule of thumb here is that this ratio should not be more than 2.0 to 2.5 of household income, and monthly carrying cost not exceeding 1 percent of a house`s value. The housing price-to-income ratio has sustained its popularity over the years primarily because of its mathematical simplicity which makes it easy to explain to non-experts. Because ratios are pure numbers, they are easy to compute and apply. The data required for calculating the ratio are also readily available from official sources. The ratio can also be used in comparative data analysis and studies across different areas and over different periods. However, many authors have questioned the theoretical or logical foundation for the concept underpinning the method and the particular ratio or ratios that are used. Stone et

al (2011) for example, believe that the ratio and the indicator benchmark of 30 percent are not based on scientific evidence but appear to have emerged from historical observations and financial institutions lending practices. This implies that a high house price-to-income ratio may not always indicate a high cost burden but may simply show a households preference for a large quantity or high quality of housing consumption. Therefore, a high cost burden alone may not imply unaffordability across board (Darmanin, 2008). The standard indicator benchmark of 30 percent of income originally included all households regardless of their income level without taking into account differences in preferences (DTZ Research, 2004). Under that ratio regime, high income earners can spend over 30 percent of their gross income on housing and still have sufficient funds for non-housing expenses. In view of this, the 30/40 rule was introduced and refers to the point at which a household in the lowest 40 percent of income distribution spends 30 percent of its gross household income on housing costs. Anything beyond this and housing is considered to be unaffordable (OFlynn, 2011). Therefore, the 30/40 rule is now the preferred benchmark because it specifies the point on the income scale that is considered. Another concern with the house price-to-income ratio is that it does not take into account whether the remaining income is adequate to meet other essential non-housing expenditures and thereby maintain adequate housing and an adequate standard of living (Stone, 2006). Furthermore, as a measure of housing affordability, the ratio does not take into account varying interest rates, tax regimes, quality of housing stock and overcrowding, all of which will have a significant effect on housing affordability and

peoples decision making (Burke et al, 2004). Indeed, the house price-to-income ratio completely ignores the cost of finance in spite of the fact that few households purchase a house without using some form of financing arrangement.

Rent-to-Income ratio Similar to the house price-to-income ratio which measures home ownership affordability, the rent-to-income ratio measures rental housing affordability by taking an individuals or households rent payment as a percentage of their income. Conventionally, housing is considered affordable to a household if the rent, including utilities, is no more than 30 percent of its pre-tax income (Belsky et al, 2005). Households spending more than 30 percent are therefore regarded as cost burdened. Although the rent-to-income ratio and its indicator benchmark of 30 percent may appear simple, there is considerable debate about the exact formula for the ratio and the baseline remains contentious. DTZ Research (2004) reports that the formulae for the ratio vary according to the measurement variables to be used: gross or net income, dwelling rent or rent net of housing allowance; or whether utilities and some service charges are included in the rent. The rent-to-income ratio shares many of the advantages and disadvantages of the housing price-to-income ratio. In addition to its simplicity, Hulchanski (1995) observes that the rent-to-income ratio can be used in a valid and reliable way for description of household expenditures and the analysis of trends. Some authors have expressed concern with the inability of the ratio to take account of upfront costs that renters need to make such as rent in advance and bond money (Freeman et al, 1997). The rent-to-income ratio also does not indicate the extent to which housing arrangements, such as sharing, which may

be unsatisfactory, are resorted to by households in order to obtain affordable housing (Thalmann, 2003).

The Residual Measures The residual measures are concerned with the relationship between housing costs and the capacity of households to meet essential non-housing costs and thereby maintain an acceptable standard of living (Gabriel et al, 2005). They recognize that housing costs are the largest and least flexible expense on a households income and therefore the amount of money a household has to spend on essential non-housing needs tends to be determined by how much income is left after housing costs have been paid. It follows that a household has a housing affordability problem if it cannot meet its non-housing expenses after paying housing costs (Stone et al, 2011). The residual measures attempt to address some of the perceived problems of the ratio measures by providing a better assessment of the achieved living standard of a household and relating specific housing costs to specific households and their incomes rather than analyzing data at the aggregate level (Henman and Jones, 2012). Milligan (2003) highlights the major difference between the ratio and residual measures by noting that whereas a ratio measure detects an affordability problem using a benchmark indicator, a residual measure uses a sliding scale to consider whether housing is affordable in the context of income levels and the broader basic household needs. In a similar vein, Maclennan and Williams (1990) argue that the use of a single indicator benchmark to assess housing affordability across all tenures, locations and house types over simplifies actual minimum housing costs and income requirement for housing consumption. This implies that the residual measures recognize that a realistic concept of affordability is

sensitive to household size, composition and income and therefore highlight the interaction among incomes, housing costs and the costs of non-housing needs. DTZ Research (2004) reports that the use of residual income measures in assessing housing affordability emerges mainly from the discussion and debates around the social security system and household budget standards which assume that housing consumption plays a central and critical role in any social security system and should therefore be used to address income problems. Typically, the residual measures specify what constitutes a minimum level of adequacy for essential non-housing needs based on either the poverty line or the budget standard. The poverty line (the most commonly used poverty line is the Henderson poverty line) and the budget standard constitute the two methods for broadly determining a residual measure of housing affordability.

The Henderson Poverty Line Johnson (1996) explains that the Henderson poverty line employs a cash notion of income which restricts income to money received from all sources. Johnson further points out that the poverty line provides a measuring stick with which to compare individual circumstances and also serve as a useful and important component in the process of measuring poverty (Johnson, 1996:110). It measures poverty by calculating the number of families whose annual income fell below a specified poverty line, defined as a level of income that would provide an austere standard of living (Bradbury et al,

1986, cited in Gabriel et al, 2005). The Henderson poverty line is based on estimates of

housing and non-housing costs and identifies the level of income necessary to maintain a certain minimum adequacy standard of living (Burke, 2003). It establishes a specific poverty benchmark for both before- and after-payment of housing costs that makes it possible to show poverty rates before and after the onset of housing costs (Henman and Jones, 2012). Two types of poverty lines are used as a measure of housing affordability: an estimate of income including an allowance for housing costs (before-housing poverty line) that compares actual incomes with the poverty line set as some relationship (e.g. median or mean) to national average earnings; and an estimate excluding housing costs (after-housing poverty line) which then enables, by comparison, an evaluation of the effects of housing costs on accentuating or mitigating poverty (Burke and Ralston, 2003). While the Henderson Poverty Line approach remains popular among scholars and researchers, its assumptions about household expenditure are still regarded as crude (Karmel, 1998). In addition to this flaw, the housing costs provision is based on average housing expenditure without regards to differences in tenures. Furthermore, since no low income cut-off is specified, high income households who overspend on housing are also inappropriately considered at risk of having unaffordable housing.

The Budget Standard According to Saunders et al (1998), a budget standard is an alternative to an income measure of poverty such as the Henderson Poverty Line. It evaluates whether housing costs have risen for low income households to the degree that they affect their ability to maintain an acceptable minimum standard of living. The primary concern here, as observed by Burke and Short (2002), is identifying and finding a measure of what represents such a minimum standard of living. One way of doing this, they find out, is to

focus on the level of consumption consistent with a defined minimum acceptable budget standard. Here a budget standard represents what is needed, in a particular place at a particular point in time, in order to achieve a specific standard of living (Saunders et al, 1998). Although the budget standard seems to offer a more sophisticated measure compared to the Henderson poverty line approach its major flaw lies in the fact that a budget standard has to be defined by someone and is therefore subjective (Burke and Short, 2002).

Advantages of the residual measures The major strength of the residual measures lies in their ability to consider the impact of household structure on household needs by taking into account differences in nonhousing needs for different household types. Another key strength of the residual measures is that the measures provide a better assessment of the achieved living standard of a household. Gabriel et al (2005) contend that the measures are useful for examining both low and moderate-income households expenditure patterns. As with the ratio measures, the residual measures are also sensitive to housing and labour market relations.

Disadvantages of the residual measures A core problem with the residual measures, as noted by Henman and Jones (2012), is that they are dependent on subjective assumptions about household expenditure. In addition, these measures are difficult to utilize. Instead of a uniform percentage, a separate benchmark is required for each household by relating a specific household to a household type to which a budget standard has been derived. Another drawback is that they rely on a wider range of variables, especially data on non-housing costs, which are not always

readily available. A further flaw of these measures is the inability to control for the geographical variations in costs of living. As with the ratio measures, the residual measures are fiscally focused, and as such are not able to ascertain the more qualitative aspects of housing as denoted in the concepts of housing adequacy and housing quality. Gabriel et al (2005) have commented that due to the more onerous data requirements of the residual measures, they are more complex and time consuming to create.

Accessibility/Deposit Gap This is an access affordability measure that is concerned with the ability to achieve home purchase. Smith (2009) explains that this method of measuring housing affordability attempts to measure the saving/deposit required to purchase a home and the ability of the purchaser to secure the necessary mortgage for the purchase. The main variables used are: house prices and up-front costs; pre-purchase costs including conveyance/legal fees, stamp duty, survey fees, council/water rates, services connection, removal/relocation fees and insurances; purchaser savings/deposit levels; and the purchasers maximum borrowing capacity (Smith, 2009: 2). This method, in essence, measures the gap that needs to be made up by a deposit (the difference between house prices and the maximum borrowing capacity of households). While explaining this form of measurement, OFlynn (2011) notes that the deposit gap is the amount by which the average house price exceeds the amount a household on the average income can borrow. OFlynn identifies the affordability index as an example of this type of measure and cites it as a measure which also takes into account the level of interest rates. According to the Senate Inquiry (2008), the index is calculated as the

monthly loan repayment on a typical 25-year mortgage loan large enough to pay 80 percent of the cost of a house with the median price paid by first home-buyers, relative to household income. The Accessibility/Deposit Gap method is used only in home ownership affordability measurement and is in fact a derivative of the ratio measures. As a complex and multidimensional issue that embodies specific individual circumstances, government policy and broad social and economic factors, it appears that no measure of housing affordability or group of indicators can capture the specific nature of each households situation. The averages, ratios and the benchmark indicators do not reveal how households and individuals adapt their lives to minimize or mitigate housing affordability problems. The existing quantitative measures can reveal that there is an affordability problem but may not show how it is felt and adapted (Gabriel et al, 2005). It appears therefore that a majority of research has concentrated more on low income households, rent, housing costs, social housing and measures of housing affordability with little emphasis on how to extend affordability to a broader range of income groups. The study attempts to fill the gap by looking at the aggregate effect of the components of housing production on housing affordability. Burke (2003) captures this scenario succinctly when he notes that conceptualizing and measuring housing affordability needs to be rethought. This, according to him, requires moving beyond the benchmarks to new ways of thinking that will focus much more on product and industry.

Why Housing Affordability is Important The study is driven by the recognition that the provision of safe, healthy and affordable

housing for households of diverse income and compositional types in Nigeria is vital on grounds of economic efficiency and development, healthy living, equity and social justice. The need to provide affordable housing to meet the demand and expectations of the citizens is fundamental to maintaining stability of families and supporting an acceptable standard of living (Davis, 1993). In consonance with this, Phibbs (2009) observes that it is not possible to build sustainable economies if the social and economic networks in the cities are disrupted because of people leaving the cities in search of more affordable housing. Davis (1993) further links the availability of affordable housing to the economic vitality of communities, cities and countries. Still other researches have also highlighted the challenges for city economies of not having access to important workers such as police, nurses, bus drivers, cleaners, hospitality staff because they have left cities in search of cheaper housing (EPIC Dot Gov, 2004; ACTU, 2007). In its research paper, ACTU (2007) summarizes the importance and crucial role of affordable housing thus: affordable housing is crucial to a country and its people. Without it, people are impoverished, families and communities eroded, jobs lost, the economy weakened and the environment damaged. It has been documented that the difficulty in acquiring affordable housing affects both the rental and homeownership housing markets and its effects are felt across all income groups, though at varying degrees (Davenport, 2003). It is therefore understandable that adequate and affordable housing is a necessary item in the efficient functioning of the economy. Housing is a basic non-substitutable element of household consumption that is typically expensive relative to household incomes or investor resources (Gabriel et al, 2005).

Therefore, declining housing affordability forces households to spend a larger percentage of their income on housing, thereby squeezing expenditure on other key non-housing consumption, which in turn affect the quality of life and urban neighborhoods (Ambrose, 2005). Studies have shown that high housing costs lead to family budget trade-offs that reduce spending on food, clothes and recreation and shortchange healthcare and health protection (Mueller and Tighe, 2007). In sum, the lack of affordable housing gives rise to a number of adverse consequences that have implications on housing, economics, finance, construction, ecology, environment, technology, social cohesion, health, urban and regional development, labour market performance, aged care, employment, community sustainability and livable cities (Gabriel et al, 2005; Salama and Alshuwaikhat, 2009). The study examines some of the consequences of declining housing affordability: 1, Housing that costs more than a household can afford will threaten family stability, thereby exposing the household to the possibility of foreclosure (Crowley, 2003) and if the property is subsequently sold by creditors for less than the loan outstanding, the family not only loses its home but also remains in debt (Ambrose, 2005). In the rental sector, high housing costs can place the households at risk of not being able to sustain their tenancy, thereby creating an increased potential for homelessness (Gabriel et al, 2005). Cohen (2011) shows that homeless people with chronic diseases such as HIV/AIDS, diabetes and hypertension may have difficulty properly storing medication, maintaining a recommended diet and going to follow-up appointments. The challenges posed by homelessness may also increase the likelihood of engaging in risky behaviour

such as sharing drug needles or exchanging sexual favours for shelter. 2, Unaffordable housing situations force low income families to move frequently to find adequate and suitable housing and these frequent moves make it difficult for children to adjust to new schools, friends and neighbours thus leading to poor emotional and social adjustments (Buerkle, 1998). 3, One of the deleterious effects of poor and declining housing affordability is overcrowding. Overcrowding, according to Olotuah (2010), is a hazard to health where sleeping accommodation is congested and ventilation is poor. More than the health hazard, overcrowding also impedes the ability of children to complete homework successfully and timely and negatively influences a childs ability to focus at school, increasing stress and causing poor school attendance that leads to poor academic performance (Braconi, 2001). Reading takes deep concentration and if there is no silence or quiet time and the TV is always on, children in such environment will have little chance of doing well in school. 4, The lack of affordable housing can affect the efficiency with which labour markets operate. It has the capacity to contribute to a spatial mismatch between jobs and workers, inhibiting migration to high-employment, high-cost locations while encouraging migration to low-employment, low-cost areas. This is true, particularly in relation to the availability of lower-paid workers in high-cost cities (Yates et al, 2007). Gabriel et al (2005) find that in high demand areas, the lack of affordable housing may result in wage pressures in the form of higher pay claims that adversely affect the competitive advantage of firms locating in these areas by being unable to attract and retain key employees. Employees find it difficult to

support the high housing costs on their incomes and may resort to changing to jobs that are in high affordability areas. This results in high rate of staff turnover which imposes its own costs on the firms. 5, High housing costs and the heavy debt that underpins them give rise to reduced family savings and affect investments in other sectors that are essential to the long-term growth of an economy (Gabriel et al, 2005). The excessive debt burdens undertaken by home purchasers and renters in response to the high house prices can make households more sensitive to interest rate increases and contribute to increased aggregate demand which in turn adds to increased debt that may lead to severe credit squeeze (Yates et al, 2007). In sum, housing affordability affects the economy through its impact on stability, efficiency and equity and may make it more difficult to manage the economy. 6, Housing affordability has a very significant impact on wealth distribution in most societies and therefore can contribute to social and economic problems that flow from an inequitable distribution of resources (Yates et al, 2007). The housing market as it is today seems to serve as a veritable tool for channeling wealth and economic resources away from those outside the housing market (such as renters and would-be home owners) to those inside the market (such as existing home owners). The rising housing costs create substantial increases in the asset levels of residential property owners and the rich thereby widening the gap between them and the majority of non-owners. This phenomenon also tends to favour the older generation at the expense of younger people with its attendant disaffection and youth restiveness. As Ambrose (2005) observes, the proportion of income devoted

to housing costs tends to rise as one moves down towards the bottom of the income scale and this may well indicate that income inequality or the wealth gap will continue to widen. 7, Declining housing affordability is potentially a source of personal hardship and social and political tension (Mueller and Tighe, 2007). In Nigeria, our home and its contents are very potent statements about us and represent symbols of our ego and therefore poor quality housing can indeed be a great source of shame for many people. Dunn (2000) documents that poor quality housing can cause psychological stress and can negatively impact self-esteem and family selfsufficiency. 8, A study reported in Social Trends 34, 2004, and used in Ambrose (2005: 186), shows that unsustainable forms of home ownership may force couples to put back the age of having a first child and perhaps further children. The study shows that fertility rates in the under-29 age groups declined sharply while those of women in their late 30s has almost doubled. This phenomenon is not surprising given that increased and longer participation in the labour market is necessary for households to earn enough money to build their homes or maintain their rented apartments. 9, Steeply rising house values can disrupt household finances and place yet another stress on already fragile families. The increased stress may accelerate relationship breakdown with all the associated personal and social costs. The increased stress may be felt not only when these events occur but also in the period when they are clearly in the horizon (Ambrose, 2005).

10,

Olayiwola et al (2005a) report that the high cost of urban land and the attendant high cost of housing force a majority of Nigerians to areas of high housing affordability that are characterized by overcrowding, poor and inadequate social amenities, unsatisfactory and unwholesome environmental conditions. The high concentration of low income households in these areas increase the levels of crime and anti-social behaviour and undermine social cohesion and community bonds. The spatial characteristics of the resultant environment deter investments and create areas of urban blight with poor social infrastructure (Stegman, 1998). Gabriel et al (2005) also report that the unintentional sorting of households in response to differentials in housing affordability create spatial polarization and impair economic and social sustainability. A study by Mueller and Tighe (2007) however finds that giving low income households access to better housing, schools and services in affluent neighbourhoods where they are exposed to middle- and high-class peers and social norms seems to ameliorate these negative consequences.

11,

A popular clich goes thus: innovate or die. This applies also to housing where innovations are urgently needed for greater environmental sustainability in the areas of more efficient use of building materials and design. The existing high cost of housing may inhibit progress towards achieving such innovation goals since building and development industries will rather concentrate on keeping house prices down than undertake the innovations needed (Gabriel et al, 2005).

Informality and Housing Affordability Informal and formal economies exist side by side in all countries, but on average, the relative size of the informal sector is considerably larger in developing

countries than in developed countries (Arnott, 2008). Invariably, this has important implications for housing in developing countries. According to the International Labour Organization (ILO), the formal economy consists of the enumerated, large and small scale, capital intensive firms that operate under government rules and regulations, while the informal economy comprises the unenumerated self-employed and unregistered economic activities that provide large amounts of products and services that people use every day (ILO, 1972). Informal suggests a different way from the norm, one which breaches formal conventions and is not acceptable in formal circles (UN-Habitat, 2003).

While all formal economic activities operate under the purview of the law, a major and salient characteristic of informal economic activities is their extralegality (Hansen and Vaa, 2004). Hansen and Vaa (2004) observe that the informal economy is also characterized by its ease of entry, reliance on indigenous resources, family ownership of enterprises, small scale of operations, labour-intensive and adapted technology, skills acquired outside the formal school system and unregulated and competitive markets. Although the activities in the informal economy are extra-legal or irregular from the official standpoint, most of the actors concerned consider them not only functioning but normal and legitimate (Hansen and Vaa, 2004). Arimah (2010) associates the widespread crisis of state capitalism and the collapse of the state with the proliferation of informal activities and the general in-formalization of the economy, especially in developing countries.

Informality has been viewed from different perspectives. While certain scholars have glorified informality as an ingenious expression of creativity and a

repository of unlimited low-skilled labour in urban areas (De Soto, 1989; Lewis, 1954), others paint a rather grim picture. In his first book, The Other Path: The Invisible Revolution in the Third World, Henando De Soto describes the informal economy as the peoples spontaneous and creative response to the states incapacity to satisfy the basic needs of the impoverished masses (De Soto, 1989: 14). He, in fact presents informality as heroic entrepreneurship. This contrasts sharply with the language of crisis associated with the informal sector as presented by other scholars. Hall and Pfeiffer (2000), for example, express great concern about the proliferation of informality in developing countries and argue that the phenomenon is gradually being exported to the cities of the developed world, through migration, making such cities open to rapid degeneration and decay. In a similar vein, Smolka and Biderman (2011) note that informal operators tend to reap higher profits because they avoid paying license fees, taxes and other statutory fees, thereby depriving the public of certain social benefits or public goods. The informal sector reduces governments fiscal capacity as well as compromising the effectiveness of income taxation and redistributive welfare programs (Arnott, 2008). Roy (2005) however argues against the frames of crisis and heroism and views informality as a mode of urbanization that governs the process of urban transformation itself. From this perspective, the informal economy is therefore a universal phenomenon present in countries and regions at very different levels of economic development (Hanson and Vaa, 2004).

At first glance, the dichotomy of formal and informal economy suggests two

separate sectors, but a closer look will reveal a continuous interface between the two entities. This is particularly so because the informal economy is no longer exclusively the domain of the poor as previously understood, but a series of transactions that connect different income groups and spaces to one another, (Roy, 2005). The well-to-do as well as the poor seek livelihoods and profit in the informal economy, therefore, the informal economy is not confined to a set of survival activities performed by destitute people on the fringes of urban society (Roy, 2005). Against the notion that the informal sector is a totally localized subsistence economy (Hall and Pfeiffer, 2000), Roy (2005) cites the example of the Dharavi slum dwellers that manufacture high quality products that are exported to the global markets. Further on this line of argument, Roy (2005) conceptualizes informality as a differentiated process that embodies varying degrees of power and exclusion, as against the belief that informality is a direct consequence of poverty (World Bank, 2006). In a similar vein, Jessop (2002) debunks the notion of self-help, which devolves responsibility for poverty primarily to the poor themselves and obscures the role of the state and even renders it unnecessary.

HOUSING INFORMALITY Housing is described as informal when, for a variety of reasons, it does not conform to current regulations concerning land ownership, land use, zoning or building codes and byelaws (Shlomo, 2000). Many other terms have also been coined for informal housing: slums, squatter settlements, shanties, unauthorized

housing, unconventional dwellings and unplanned settlements. Some of the common characteristics of informal housing are insecurity of tenure, overcrowding, low profile/informal economy, limited participation of citizens in the decision-making process and development, inadequate access to safe water, inadequate sanitation, poor structural quality of housing, improvised building materials and processes, non compliance to local building codes, location in hazardous zones and economic and social deprivation (UN-Habitat, 2003; Arimah, 2010; Nabutola, 2004).

Informality in housing and land occupation is a multidimensional phenomenon and one of the most visible characteristics of major third world cities (Arimah, 2010; Smolka and Widerman, 2011). A study by Shlomo (2000), shows that in 1990, about sixty seven percent of housing units in developing countries were informal and unauthorized while essentially none existed in high income, developed countries. This reinforces the anecdotal idea that the incidence of informal housing is more peculiar to the developing countries. The larger relative size of informal housing in developing countries therefore imposes important fiscal constraints on government policy that are not present in developed countries (Arnott, 2008). Numerous socio-economic factors drive the formation and growth of informal settlements. Much of the literature on housing has identified rapid urbanization as a major factor in the prevalence of slums and informal housing in developing countries (Davis, 2004; UN-Habitat, 2003; Arimah. 2010; Tipple, 1994). Available projections point to a rapidly growing urban population in much of Sub-Saharan Africa in the face of rising unemployment, financially weak governments, poor agricultural performance and the absence of sound urban planning policies to respond to the high level of urban growth (Cheru, 2005).

Africas urban population is projected to increase from 294 million to close to 750 million by the year 2030 (UNPF, 2007). This translates to a stronger demand for scarce resources that will drive up the value of land and make it more difficult for the urban poor to find affordable space in desirable locations (Boudreaux, 2008). Thus existing cities are likely to be larger and their housing and associated infrastructure will need major additions. Much of this growth takes place outside of any formal planning and administrative process. The shortfall in the number of dwellings to the number of households increases housing costs higher than wages and create a shortage of rental housing and urban accommodation generally. But the resources to meet this considerable housing challenge is lacking. Governments are therefore unable to manage the swelling responsibilities. This inability of many governments to provide adequate and affordable housing has led the vast majority of urban population, out of necessity, to live in housing built without authorization or build shacks in informal settlements. It is therefore not surprising that the most effective supply of housing in the developing countries takes place outside the law (Hanson and Vaa, 2004).

Although many governments have formulated laudable policies to provide adequate and affordable housing to their population, ineffective implementation made these efforts futile. Inadequate capacity and capability to cope with the housing needs of people in urban areas contribute to the development of informal settlements. Factors such as governments lack of resources, corruption, misappropriation and patronage have combined to reduce the ability of most of the developing countries to meet the increased demand for new housing, let alone

catch up with backlogs (Uji and Okonkwo, 2007; Tipple, 1994; Hanson and Vaa, 2004; ). There has been a decline in the number of public and social housing and a decrease in the proportion of low cost housing in the market as the population grows. In many instances, actual provision of public formal housing, was significantly lower than envisaged plan (Tipple, 1994). Taken together, the above factors fuel the informalization of housing provision and services that the state is unable to meet. Attempts by governments to specifically provide affordable housing to the poor also failed because only the middle- and the upper-income earners could afford the houses provided, making the proliferation of slums inevitable (Uji and Okonkwo, 2007). In recent years, frequent political conflicts, internal wars, violence and upheavals in Africa have exacerbated the problem of housing informality (Geschiere and Nyamnjoh, 2001).

Stiff planning, regulatory and building standards contribute to the development of slums and squatter settlements by making land unavailable and unaffordable to low income households (Payne, 2005). Most African countries have continued to operate inherited legal frameworks for urban development that were designed to contain housing development rather than to deal with rapid population growth as currently experienced (Hanson and Vaa, 2004). In the period of colonial rule, the essential logic of colonial urban government was in fact that of exclusion, hierarchy and difference (Jones, 2011). Transformation and adjustment of this fundamental condition of the city, from colonial to modern, has been slow in coming. Arimah (2010) reports that the land registration process in Nigeria, for example, takes about 274 days and incurs official fees totaling more than 27

percent of the property value, while Ikejiofor (2003) cites a similar situation where entrepreneurs follow a complex process to formally develop land in Nigeria. In a similar vein, Tipple (1994) reports that local building regulations often exclude cheap traditional materials frequently used in informal housing. These demonstrate the exclusionary nature of the regulatory framework and bureaucratic procedures existing in developing countries which restrict the provision of formal housing affordable to the poor and not-so-poor. The barriers create incentives for developers to shun the formal approval processes and operate in informal housing and land markets. The result is the emergence and proliferation of unauthorized and informal settlements.

Poverty and social ostracism play a primary role in the formation of informal housing settlements across the globe. In a study by Arimah (2010), GDP per capita is linked to the prevalence of slums. He finds that an increase of 1 percent in GDP per capita will occasion a reduction of 7.6 percent in the proportion of a countrys urban population living in slums. This finding further reinforces the observation that informal settlements are a physical and spatial manifestation of urban poverty and intra-city inequality (World Bank, 2006; Nabutola, 2004). This perception however, has adversely affected urban planning approaches because it attempts to localize the issue and essentially exempt local urban planning managers from responsibility for the problem (Smolka and Widerman, 2011).

According to Edelman and Mitra, (2006), increased levels of infrastructure can serve as a means of promoting formality in housing. Other research findings show evidence of a positive correlation between infrastructure development and economic growth (Estache et al., 2002; Warr, 2005). Warr (2002) reports that infrastructure development plays a major role in promoting growth and equity and

through both channels help reduce poverty which is linked to the development of informal settlements. In summary, higher investments in infrastructure lower the incidence of slums. But there is an abysmally low level of infrastructural investment and development in developing countries which forms a squeeze in economic development.

An analysis of the incidence of informal housing in developing countries shows that the phenomenon can best be approached as a housing affordability issue and seen as a response to problems of government involvement in the housing sector. Economic models of informal housing markets show that most households have incomes that are below the level needed to bid competitively for housing in the open market and at any location. Other options, including living at the urban periphery, are also unaffordable because of high transportation costs, lack of basic services and lack of employment in these locations. Self-building, to conform to minimum lot size requirements or current building codes, is not affordable too, giving the high transaction costs associated with this mode of housing. In sum, informal housing can be seen as a distinctive type of market where affordability accrues through the absence of formal planning and regulation (Roy, 2005:149).

Government economic policies, bureaucratic red tape and high transaction costs have inadvertently created land scarcity, limited the availability of credit for both developers and potential buyers and made the process of acquiring tenure security complicated and expensive (Boudreaux, 2008; Smolka and Biderman, 2011). High interest rates and rigid labour laws also make it difficult for the urban poor

to access commercial credit for mortgages and develop affordable housing (Boudreaux, 2008). Therefore, informal housing can be seen as partly a creation of the state since some of the policies largely increase the economic incentives affecting the decision to occupy land illegally, thus encouraging further informal land occupation. Government planning regulations are also implicated in the process that creates high minimum plot sizes, low densities, inappropriate zoning, high land-use standards, strict building codes and land-titling laws that are difficult to meet and obey. At first glance, informality in housing seems to epitomize illegal, irregular and clandestine activities by those who engage in it. However, it can be argued that residents of such housing have no other choice for shelter and the situation would seem to entail deliberately breaking the law. As such, they may be exercising their right to the city in contrast to planners focus on the utilitarian question of where things belong (Krueckeberg, 1995). The reduction of public sector housing (what has been termed the withdrawal of the state), along with lack of safety net programmes and poverty alleviation policies for the poor, have resulted in increased inequalities in the distribution of wealth and resources at all levels (Durand-Lasserve, 2006). The urban periphery and marginal areas of cities, originally known for harboring the urban poor, are now under increasing gentrification pressure (UN-Habitat, 2011). This confirms the observation of Aguilar and Ward (2003) that the rural/urban interface is in fact the site of the new informality in many countries. Indeed, as Graham and Marvin (2001) note, the metropolitan fringes have become a key location for the informal housing practices of the elite. In this sense, Tibaijuka (2007) and Roy (2005) converge on the idea that the more fundamental issues at stake in housing informality are: wealth distribution; unequal property ownership; and rising poverty and inequality. This implies that a good deal of attention is needed on the sort of housing markets that are at work in our cities and how they shape or limit affordability. To deal with informality therefore means that urban development policies should more vigorously address the issue of livelihoods of slum dwellers and urban poverty, going beyond traditional approaches that concentrate on improvement of housing, infrastructure and physical environmental conditions (Nabutola, 2004: 8).

Smolka and Biderman (2011) point to a complex set of dependency between informal housing and land markets and formal settlements and show that informal

settlements are in fact compatible with otherwise well-functioning housing and land markets. The informal city is no more exclusively the domain of the poor. The better off segments of the urban population also engage in illegal land occupation and construction, reaping extraordinary profits and paying little or no taxes and levies (Hanson and Vaa, 2004). In fact, informality presents a gap for arbitrage, offering opportunities for the middle class and the elite for rapid enrichment at the expense of the entire population. This class of upscale informal housing development, as reported by Graham and Marvin (2001), is often encouraged and promoted by agents of the state and usually counts on future regularization of title and premium infrastructure provided by the state. This trend is contrary to popular perception and point to the fact that informal settlements are not totally localized and the inhabitants do not form a homogenous population. It also disguises the reality that within the informal city lie a multitude of different income classes and communities.

Whilst most informal settlements show the characteristics listed above (as well as some formal settlements), in no way can they be attributed as inherent characteristics of all informal housing communities. There is evidence, as detailed above, of well laid-out and safely constructed dwelling houses in informal settlements as well as middle- and upper-class, law abiding citizens living side by side poor inhabitants in many informal settlements. Therefore, the issue at stake here is not the well-known dichotomy of formal housing and informal housing or legality and illegality, but the challenge in ensuring affordable housing for all.

This is the major planck of the study.