THE EFFECT OF RISING COST OF BUILDING MATERIALS ON RESIDENTIAL PROPERTY DEVELOPMENT

Abstract

Building materials played an important role in the Property development. It includes those materials put together in erecting or constructing structures, development is not conceivable without their use. The cost of building materials poses a significant threat to both the construction industry and people aspiring to own houses and that many projects were not completed on time due to the cost of materials, which have been on the increase. This study examined the effect of rising in the cost of building material on real property development in Ijede area of Lagos state, Nigeria. A field survey research design was adopted for collection of primary data on the subject of study. The target population comprises of forty (40) property developers, forty (40) contractors and 40 building materials dealers operating in Ijede area of Lagos state. The sample size of this project is 120; this comprises property developers, contractors and building materials dealers operating within Ijede area of Lagos state which were targeted for administration of questionnaire. Random sampling technique was used as appropriate sampling technique. The questionnaires were complimented by oral interview. Descriptive statistics was used in analyzing the collected data such as cross tabulation, frequency table the paper revealed that cost of land acquisition, cost of building materials, professional charges and lack of capital are militating against property development in the study area. It is indeed unfortunate that the alarming increase in cost of building materials and labour does not only affect the rent passing on prospective tenant nor the market value of such property but also on the individual dream to build and owned a home in the study area. Besides timely completion, high prices of building materials form a crucial constraint to improving housing conditions in the low-income earning countries like Nigeria. Over dependent on imported materials and lack of instability in government policies and programme among other factors has a drastic effect on cost of building materials. Inhibited innovations in construction methods, quality of workmanship is affected, quality of workmanship is affected, project abandonment, volume of construction output is affected. The study recommends that incessant rising in cost of building materials be remediable through the development/use of alternative building materials, among others.

Chapter one

Introduction

1.1Background of the study

The increasing commercial and industrial activities have a substantial potential to attract many people (jobseekers, businessmen and others) into the community with the attendant consequences of increasing the problem of shelter access for all (Ihuah, 2015). This is important as more residential accommodation are demanded by relocating people. Hence, the government rationale to urgently and adequately improve residential property supply so that the envisage demand can be met (Ihuah, 2015). However, the current incessant rising costs of building materials in this specific context facilitates the quest of investigating its effects on property development(Residential housing estate project).The exceptionally high increases in costs of building materials has affected the efforts to progress the number of residential units’ provision to an extent that the current demand may not be or reduced to a minimum (Magutu, 2015).

In Nigeria as a whole, the construction industry still facing the challenges of low levels of working capital, high rates of inflation and increasing costs of development/construction (Umar, 2017). Most of these situations are currently not properly attended to; subsequently, it leads to some development projects being abandoned, uncompleted and vandalized (Ihuah, 2015). The repercussions of not tackling these issues, especially the increasing costs of developments as a result of the increasing costs of building/construction materials means that current demand outweighs the available supply (Kolo, Rahimian, &Goulding, 2014).

The building industry in Nigeria is encapsulated with shortage of affordable and sustainable building materials; people have difficulties building houses of their own because the cost of building materials is astronomically high. It was for this reason that the Nigerian building and road research institute (NBRRI) was established in 1978 to mapped out strategies for alternative building materials that will be affordable and sustainable, (Saba, 2018). The NBRRI laid emphasis on development of suitable local building materials from minerals deposits and agro industrial waste that are abundantly available at little or no cost.

The cost of building materials are increasing in leaps and bounds leading to abandoned project by some landlords as they are not sure of what will be the value of their property on completion. Obviously, it is indeed unfortunate that the alarming increase in cost of building materials and labour does not only affect the rent passed on prospective tenant or the market value of such property or the individual dream to build and owned a home in Ijede area of Lagos state but also the construction industry to a large extent, such that the cost of construction, cost of materials is said to have increase by 133.33% within the last two and a half decades. Most literature had concentrated on identifying the causes with little emphasis on the effect; hence, this research seeks to provide information on effect of the rising cost of building materials on residential property development in Ijede area of Lagos state.

Statement of the problem

Inspire of the past studies on the cost of building materials in Nigeria, little us publicized about the effects of the rise in cost on property development; most literature (Jagboro and Owoeye, 2004; Meckson,2008; Njoku,2007; Oladipo and Oni,2012) has concentrated on identifying the causes with little emphasis on the implications, hence, the research seeks to provide information on effects of the rising cost of building material by examining its influence on property development.

Objective of the study

The objective of the study is to find out the effect of rising cost of building materials on residential property development. The specific objectives are;

1.  To ascertain the factors responsible for the increasing cost of building materials in the Ijede area of Lagos State.
2.  To examine factors militating against property development in the study area.
3. To examine the effect of rising cost of building materials on property development in the study area

Research Question

The following research questions are formulated;

1. What are the factors responsible for the increasing cost of building materials in Ijede, Lagos State?
2.  What are the factors militating against property development in the study area?
3.  What are the effects of rising cost of building materials on property development in the study area?

Significance of the study

The study shall be an avenue of revealing the effect of rising cost of building materials on property development. It will reveal whether the effect is positive or negative. Infract, the study shall give an insight to factors responsible for the incessant cost of building materials and also factors militating against property development in the study area and the country in general. It shall go a long way in aiding prospective investor who may wish to exploit the development potential of the fast growing state in determining the viability of their investment within the study area. The study shall provide a comprehensive picture and update information that prevails situation in the study area. Finally, the study will be of immense benefit to construction industry, private developers, government organization and corporate bodies. It shall also serve as a guide and reference material for other students who may undertake research work on similar subject.

Scope of the study

This research is confined to a careful examination of the effects of cost of building materials on property development with special emphasis on residential real estate development in Ijede area of Lagos state. The study also put into consideration the various factors that are responsible for the incessant increase in the cost of building materials in the study area.

Limitation of the study

Limitations/constraints are inevitable in carrying out a research work of this nature. However, in the course of this research, the following constraints were encountered thus:

1. Non-availability of enough resources (finance): A work of this nature is very tasking financially, money had to be spent at various stages of the research such resources which may aid proper carrying out of the study were not adequately available.
2. Time factor: The time used in carrying out the research work is relatively not enough to bring the best information out of it. However, I hope that the little that is contained in this study will go a long way in solving many greater problems.

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