CHAPTER ONE

1. INTRODUCTION

1.1   BACKGROUND OF STUDY

The issue of fair valuation of residential real estate properties has been a major challenge in Nigeria. Indeed, not much has been done in the area of valuing residential housing units in the economy. Nevertheless, in recent times, the literature on real estate has seen a number of techniques and models developed in a bid to achieve efficient valuation of residential houses.

The use of artificial neural networks has been the most popular and recent in this regards. In the advanced economies, the use of artificial neural networks is now predominant in several fields including medical diagnosis, tax assessment, analysis, stock analysis & control, traffic control, and real estate valuation, bank risk etc (Moral- Esperanza, 2004). Unlike in many other economies, the use of artificial neural networks (ANNs) in actual valuation of housing units has not been done In Nigeria, (Eriki & Udegbunam, 2008).

Few works have gone beyond mere demonstration of the use and capability of the ANNs to actual valuation of residential houses in the existing literature; and many of such works used single city data. It is against this background, that this study examines the fairness or otherwise, of the price fixing mechanism for residential housing units in Nigeria, using Benin and Lagos housing markets as examples.

Thus, the study seeks to provide answer to a question of this likes; are the market prices for residential real estate properties in Nigeria fair representations of the properties’ true values? Other specific questions to be answered are: Is there a fair market value for a housing unit? Do property prices in Nigeria represent fair market values? Lastly, are there significant differences between property market prices and artificial neural network model output prices? Thus, the study examines the valuation of residential housing units in two Awka metropolis. The quest for efficient price fixing mechanism and fair market prices is timely as Nigeria stands on the threshold of establishing a secondary mortgage market to mobilize capital market funds for the primary market.

Housing need in Nigeria increases by the day, whereas the vast majority of the population lacks the wherewithal to make effective demand on housing. The private sector, which is the major supplier of housing in Nigeria, faces a number of problems inhibiting it from meeting the ever increasing needs. The public sector has fared badly in housing provision.

A major reason for the debacle in past public sector programmes in housing is traceable to inadequate knowledge of the nature, scope and dimension of the housing problems in both the rural and urban areas of the country, and to the myopic and narrow concept of the housing needs of the Nigerian populace. As asserted by Agbola (2008) the absence of research on housing is a lag in the housing delivery system in developing countries, especially Nigeria.

1.2   STATEMENT OF THE PROBLEM

Housing is a fundamental need for dignified living and represents a major area of deprivation for the urban poor in Nigeria. the rate of provision of new housing stock in Nigeria has lagged behind the rate of population growth which may be seen as  responsible for the formation of slums, growth of squatter settlements and high rent beyond the affordable limit of the poor. Finally, most of the research has been carried out housing but not even a single research has been carried out on comparative analysis of residential property values in housing estates in Akwa metropolis.

1.3   AIMS AND OBJECTIVES OF STUDY

The main aim of the study is to examine the comparative analysis of residential property values in housing estates. Other specific objectives of the study include;

1. to determine the effect of level of fairness of the price fixing mechanism in the Nigerian real estate market.
2. to determine the factors affecting the residential properties values in housing estate.
3. to determine whether price of real estate properties represent fair market value.
4. to determine the extent to which residential property valuation affects houses in estate.
5. to proffer possible solution to the problems.

1.4   RESEARCH QUESTIONS               

1. What is the level of fairness of the price fixing mechanism in the Nigerian real estate market?
2. What are the factors affecting the residential properties values in housing estate?
3. How does the price of real estate properties represent fair market value?
4. What is the extent to which residential property valuation affects houses in estate?
5. What is the possible solution to the problems?

1.5   STATEMENT OF RESEARCH HYPOTHESIS

H0:   there is no difference in residential property values in housing estate in awka metropolis.

H1:      there is difference in residential property values in housing estate in awka metropolis.

1.6   SIGNIFICANCE OF STUDY

The study on comparative analysis of residential property value in housing estates will be of practical importance to the real estate practitioners, government agencies, internal revenue service and the academics in the sense that it will enable them to make use of artificial neural models to improve on the current level of fairness in the valuation of residential housing units, as well as to aid rapid valuation, and make possible mass valuation of properties.  Finally, the study will contribute to the body of existing literature and knowledge in this field of study and provide the basis for further research.

1.7   SCOPE OF STUDY

The study on the comparative analysis of residential property values in housing estates is limited to Awka metropolis.

1.8   LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9   DEFINITION OF TERMS

Comparative   Measured or judged by estimating the similarity or dissimilarity between one thing and another; relative.

Analysis  Detailed examination of the elements or structure of something.

Residential     Designed for people to live in.

Value       the regard that something is held to deserve; the importance, worth, or usefulness of something