ABSTRACT

Amongst all important factors influencing housing development, financing is the most critical. This is as a result of huge capital required, which in some cases cannot be provided by an individual or the private sector. Despite this capital intensive nature of housing development and finance, sourcing funds through the informal sector attracts a higher interest rate than the formal sector which militate against housing provision. As a result of this financial need, government devised a means of raising fund through compulsory deduction of 2.5 public servant monthly earnings by the enactment of the National Housing Policy; Federal Mortgage Bank of Nigeria being the regulatory body through which the fund can be accessed by the Primary Mortgage Institutions PMIs. This study examined the challenges of financing residential real estate development for low/medium income earners in Onitsha, Anambra State, by exploring the activities of the PMIs in accessing the National Housing Fund NHF for low/medium income housing development. It examined the prerequisite for accessing the NHF by residential real estate developers through the PMIs and the impact of high interest rate on credit finance. It also looked at the

contribution of the PMIs in financing residential housing development in Onitsha. To achieve this, one

hundred and eight one copies of questionnaires were administered on Estate Surveying and Valuation

Firms, Primary Mortgage Institutions officials and Real Estate Developers by stratified random sampling

in order to identify some of the challenges confronting financing residential real estate development in

terms of formal fund accessibility/availability, policy, high interest rate and other issues. Cronbachs

alpha coefficient was used to test the reliability of the instrument and the result revealed a very strong

reliability of 0.791. Analysis of the data collected from the PMIs and real estate developers was done

using percentages, tables, charts, frequency and statistical package for social sciences SPSS, version 18.

The result of the analysis shows that the PMIs have deviated from their primary role of ensuring

distribution of NHF loans to other commercial loans that promise higher interest returns, thus hindering

cheap debt finance for housing development. This makes their contribution to housing development

insignificant. Also the prerequisite for obtaining fund is inadequate as obtaining certificate of Occupancy

in Anambra State is a difficult task. The housing developers are left with no option than sourcing for fund

through informal sector on high interest rate. The study suggests that stringent measures should be

adopted by the government to ensure that PMIs focus on their primary role of disbursing NHF loans. The

NHF policy should be restructured to enable easy access to NHF loan. All funds from NHF should be for

housing development and must be disbursed through the PMIs for equitability and accountability.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY.

Residential real estate development system is a combination of many interrelated components

which include land, infrastructure, building materials, policies, building regulations and more

importantly the finance component. Finance in residential/housing development is very

important because of the huge financial requirement for housing production. Many researches

have been conducted along this line which include that of Adebamowo 2009, who

suggested the need to strengthen the cooperative housing system in Nigeria. Adedeji 2009,

highlighted the fact that financial institutions should be more accessible to the people. It is on

the basis of the importance of housing finance that government most often finds ways to

improve existing housing and housing policies. Housing is one of the three basic needs of

mankind and it is the most important for the physical survival of man after the provisions of

food. Agbola 1995, Akeju, 2007 and Nubi, 2003 stated that decent housing is one of the

basic needs of every individual, the family and the community in general. As a prerequisite

to the survival of man, it ranks second only to food. It is also one of the best indicators of a

persons standard of living and his place in the society. The house an individual lives in is a

symbol of his status, a measure of this achievement and social acceptance, an expression of

his personality and the barometer that seems to indicate in a large measure, the way the

individual perceives himself and how he is perceived by the larger society. It represents one

of the most basic human needs and has a profound impact on the health, welfare, social

attitudes and economic production of the individual. Apart from providing man with shelter

and security, residential housing development plays a major role in serving as an asset that is

capable of yielding income to the owner, Ezeudu, 2012 . Despite these essential role played

by residential housing as a basic need, an adequate supply of this commodity has been

lacking in virtually all the societies throughout history.

Moreover, housing in human development has been well documented by scholars. The

positions of scholars vary depending on the aspect of housing each one delved into.

Onibokun, 1985 ranked land acquisition and its documentation as part of the factors that

contribute to its huge capital expenditure. Omirin, 1998 researched into lowincome house

building in metropolitan Lagos. Based on her analysis of house builders behaviour in ...Get Complete Material.