AN EVALUATION OF THE RISING COST OF BUILDING MATERIALS AND IT’S EFFECT ON HOUSING DELIVERY IN NASARAWA

AN EVALUATION OF THE RISING COST OF BUILDING MATERIALS AND IT’S EFFECT ON HOUSING DELIVERY IN NASARAWA

(A STUDY OF TAMMAH)

ABSTRACT

High prices of building materials had form a crucial constraint to improving construction procurement in Nigeria. The influence of the macro-economic indicators on this problem cannot be ruled out. This study therefore investigates the impact of macro-economic indicators on the prices of building materials with a view to enhancing construction project procurement and delivery. Questionnaires were administered to respondents which included the Architects, Quantity Surveyors, Builders, Engineers, Bankers/Economist. The study established that inflation, exchange rate, import, interest rate, money supply and demand for money have a significant effect on the prices of building materials. Demand for import, inflation rate, government economic policies, level of foreign currency demand and level of foreign currency supplied were identified as causing a change in exchange rate while factors affecting inflation rate were variation in the value of the naira, demand for goods, changes in real incomes lending interest and import tariffs. On the other hand, factors causing a change in interest rate were government economic policies, demand for money, inflation rate, deregulation of interest rate. It was found that a high relationship existed between exchange rate, inflation rate and interest rate and the prices of building materials. The study recommended reduction in import duties, bringing exchange rate to the barest minimum, reduction in interest rate on banks loans while government should maintain stable inflationary trend.

CHAPTER ONE

1. INTRODUCTION
   1. BACKGROUND OF THE STUDY

Building materials have been playing an important role in the construction industry – they are those materials put together in erecting or constructing structures, no field of engineering is conceivable without their use (Akanni, 2006; Udosen & Akanni, 2010). Building materials contribute immensely to the quality and cost of housing, from what is used in the foundation to the materials for roofing and finishes, while the building materials industry is an important contributor to the national economy of any nation as its output governs both the rate and the quality of construction work.

The cost of building materials poses a significant threat to both the construction industry and people aspiring to own houses (Anosike, 2009; Mekson, 2008; Mohammed, 2008; Njoku, 2007); for example, a bag of cement, which is valued at Ν1,350.00 in 2006, goes as high as Ν1,850.00 in 2009 (Anosike, 2009) depicting about 37% increment; the bag goes as high as Ν2,000.00 in 2012 during peak season (field survey 2012). Supporting this view, Jagboro and Owoeye (2004) earlier established that increase in the prices of building materials has multiplier effects on the industry while Idoro and Jolaiya (2010) affirmed that many projects were not completed on time due to the cost of materials, which have been on the increase. Besides timely completion, high prices of building materials form a crucial constraint to improving housing conditions in the low-income earning countries, Nigeria inclusive (United Nations Centre for Human Settlement [UNCHS], 1993).

In spite of the past studies on the cost of building materials in Nigeria, little is publicized about the implications of the rise in cost on development of commercial properties, most literature (Jagboro & Owoeye, 2004; Mekson, 2008; Njoku, 2007; Oladipo & Oni, 2012) has concentrated on identifying the causes with little emphasis on the implications; hence, the research seeks to provide information on implication of the rising cost of building materials on commercial property development.

A common finding of studies is that cost is affected by a large number of factors essentially demand and supply. However, Ogunsemi (2002) submits that in Nigerian Construction Industry in the recent past, many projects have been subjected to cost and time overruns. Considering the relationship between construction industry and the national economy, it becomes necessary that the cost of construction be within the reach of the average citizen. However, some economic indicators are very significant to the overall cost of construction. Some of these indicators include; exchange rate of local currency to other currencies in the world, inflation rate and interest rate charge on loan among others.

Ogunsemi (2010) opined that building materials form the main factors that restricts the supply of housing and ascertained that they account for between 50-60 percent of the cost of buildings. Thus, Adedeji (2002) rightly observed that one main barrier to the realization of effective housing in Nigeria as revealed in successive government efforts has been the cost of housing in the country. He argued that in the early periods, shelter in Nigeria was easily affordable as building materials were sourced from the immediate environment at affordable costs. Technology also was readily available with commensurate simple techniques. But contact with the outside world through interregional and international training of professionals in foreign countries as occasioned by colonization, brought changes to tastes and hence outlook to house forms. These changes rendered the undeveloped local building materials inadequate while there was an increased demand for exotic ones.

 Accordingly, Arayela (2002) posited that the modern building industry lays much emphasis on sophisticated building materials and techniques that are expensive and energy consuming. Though, housing delivery efforts have evidently been inhibited by prohibitive costs of building materials, this problem cannot be reasonably and reliably overcome by merely resorting to the use of locally available materials without due considerations to the applicable initiative, the cost of processing and sustainability of the local materials. One of the most important components of a sustainable building is the material efficiency. Correct selection of building materials can be performed by taking into account their complete life span and by choosing products with the minimal environmental impacts. For instance, González and Navarro (2006) estimated that the selection of building materials with low environmental impacts can reduce carbon dioxide (CO2) emissions by up to 30%. The use of renewable and recycled sources is widely encouraged as the life-cycle of a building and its elements can be closed (Chwieduk, 2003).

The major factor that greatly affect the selection of building materials are their costs and social requirements such as thermal comfort, good mechanical properties (strength and durability), aesthetic characteristics and an ability to construct quickly. Ideally, the combination of all environmental, economic and social factors can give a clear description of a material, and thus helps in a decision making process regarding the cost of the materials suitable for buildings (Abeysundara, et, al.,2009) .  Nigerians would continue to pay more for accommodation in major cities until the cost of building materials is subsidized through probably through tax reduction. The instability in the price of building materials was posited as a direct result of high taxes which in turn impacts on the cost of accommodation in major cities across the country. According to Arayela (2002), many completed housing estates had remained unoccupied because of the high rental and sale prices attached to them as against the meager income of the average Nigerian workers. He also added that if government can revitalise our industrial base, the cost of building materials will come down and many more people would be able to build houses. He therefore  urged the Federal Government to provide tax relief for local manufacturers and importers of building materials in order to reduce the high cost of accommodation in major cities.

Consequently, the general consensus is that one key reason for high cost of construction in Nigeria is high cost of building materials which are largely imported materials. This is so because several factors affect imported materials’ prices such as foreign exchange, freight, inflation, import duties and so on. Similarly, Oruwari, Jev  and Owei (2002) also concur that the rising cost of building due to materials has made it impossible for people to own affordable houses in Nigeria. It can therefore be inferred that local building materials are not well utilized in Nigeria. This project therefore, is an attempt to evaluate the rising cost of building materials and it’s effect on housing delivery in Nasarawa, with a particular interest in Tammah.

1.2       STATEMENT OF RESEARCH PROBLEM

The building construction industry has special features that are not usually encountered in other industries. When conditions in the field tend out to be more complex, especially the rising cost of building materials. Rising cost of building materials, delays and other problems tend to be proportionally monumental (Gould, et al, 2002). Cost is one of the primary measures of a project’s success. This is true for housing development and delivery in developing countries like Nigeria because, housing developments are executed with very scarce financial resources which are sourced from personally savings, loan from banks, mortgage financing etc. A building project is considered successful if it is completed within the stated budget, on schedule, conform to user expectations, meet specifications, and achieve quality of workmanship and with minimized construction aggravation therefore this research becomes necessary to evaluate the rising cost of building materials and it’s effect on housing delivery in Nasarawa – a study of Tammah.

1.3       AIM AND OBJECTIVES

Aim

The aim of this study is to evaluate the rising cost of building materials and its effect on housing delivery in Nasarawa, a case study of Tammah.

Objectives

To achieve the aim stated above, the following objectives were pursed:

1.  To identify the building materials in Nasarawa
2. To identify over the years, the trend of the cost of building materials.
3. To Identify the types of housing development within the study area (Tammah)
4. To access the effect of rising cost of building material on housing delivery.
5. To identify the problem associated with the rising cost of building materials on housing development in Tammah.

1.4       RESEARCH QUESTION

1. What are the types of building materials used for housing development in Nasarawa?
2. What are the trends of the cost of building materials?
3. What are the types of housing development property within Tammah?
4. Does rising cost of building material have any effect on housing delivery?
5. What are the problems associated with rising cost of building material on housing development?

1.5       SIGNIFICANCE OF THE STUDY

This research work is significance to the government for decision making, student, practicing estate surveyors and valuers, investors, researcher.

            In addition, the study will enable property developer know how to go about their investment in real estate despite the challenges of rising cost of building materials and construction in general

Lastly, this research work will help to determine the factor influencing, commercial housing delivery which is an essential pre-requisite to successful development as well as stimulating interest in the students to coregent further research on the topic.

1.6       SCOPE OF THE STUDY

The study addresses the evaluate the rising cost of building materials and it’s effect on housing delivery in Nasarawa. The scope of this research is restricted to Tammah a suburb in Nasarawa town, this is to enable the research have an indepth evaluation.

Some obstacles encountered in the course of carrying out this research were as follow:

• Time factor was the major constrain couple with multiplicity of other classroom work and lecture requirement were a set back to the research.
• Un-cooperating attitude of some respondents as they were busy to attend to the researcher.
• In accessibility of adequate information from research respondent due to illiteracy among them, some find it difficult to understand some question they were asked.
• Finance was also a limiting factor in the course of the research.

1.7       OPERATIONAL DEFINITION OF TERMS

Building: according to merriam-webster dictionary is define as a usually roofed and walled structure built for permanent use (as for a dwelling).

Cost: Oxford advance learner’s dictionary (6^th edition) defines it as the amount of money that need in order to buy, make or do something.

Building Materials: This is any material which is used for construction purpose e.g. timber, rods, cement etc.

Property: According toCollins dictionary a property is a building and the land belonging to it.

Development: This can be describes as a progressive transformation of the society or a deliberate action to bring about change in a large scale.

Property Development: (The Collins English Dictionary, 2014) This can be define as an improvements in land.

1.9       HISTORICAL BACKGROUND OF THE STUDY

Nasarawa local government area of Nasarawa state was established in 1976 during the military regime under the leadership of General Muhammed administration.

The local government are covers an estimated area of 154 square kilometers.

It has thirteen (13) wards and consists of six departments which is responsible for carrying out the activities of personnel, social, primary health care, agriculture and natural resource. The state derives it name from the local government of Nasarawa. The local government head quarter is between latitude 8.8 degrees east of Karu. They also share boundary with Toto local government area, Federal Capital Territory and Benue.

The local government has a population of 60,210 by the 2006 census through other contest in the law court. It has multiethnic like Afo, Agatu, Gwan-dara etc.

TOPOGRAPHY

From an elevation of about 1,500 to 1,000 meters, the Nasarawa descends in a series of step to the wide Benue through the northern part of the low lands forms a continuous plain about 50 kilometers wide which gradually slopes from the foot of the Nasarawa towards river Benue.

The western part of the northern low land is an area of transaction, only part of it can be regarded as belonging to the Benue plains.

CLIMATE

Nasarawa has two seasons, which includes:

1. A dry season without or with little rain from November to March.
2. Wet season from April to October

The main annual rainfall is 1-300km

THE PEOPLE AND THEIR OCCUPATION

The major ethnics groups are Hausa, Afo, Gwari, and Gwandara. The earliest inhabitants were predominantly farmers and some of them are fishermen they use river for their routine fishing.

Besides, they were also engaged in rearing of cattle, black dying and weaving. Meanwhile, trading is one of their major occupation as a result of the establishment of the Federal Polytechnic.