THE EFFECT OF URBAN GROWTH ON RESIDENTIAL PROPERTY VALUE: A CASE STUDY OF ILORIN, KWARA STATE
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- NGN 3000
BACKGROUND OF THE STUDY
Describing Ilorin as the seventh largest city in Nigeria with a population of 777,667 according to the 2006 population census; one would easily predict a huge migration into the city, the capital of Kwara state ten years later. The desire for accessibility to the city center is expected to lead to continuous development that extends from this center as people seek more accessible locations and are willing to pay more for them. However, this only has to be the case in static situations or when landowners are short-sighted and only consider development returns in the current period. Reasonably, homeowners compare immediate development returns with their future development returns by deducting the cost of owning the property and discounting the returns to their current values. As a result, some owners may retain their land and renounce current development, while development takes place in less accessible areas that are further from the center. For example, current demand could only support the development of single-family homes beyond a certain distance. However, future urban growth could lead to a demand for multifamily houses with much higher yields, so that the most accessible country slows down in the current period. According to Alonso (1964), explaining urban expansion requires more than expectations of future growth. Given the traditional assumptions, similar owners should face a common future and make the same decisions about development. However, owners differ widely in their situation, knowledge and attitudes, which affects future expectations, as well as real and perceived holding costs. Some important differences relate to the owner's income, income tax positions, alternative investment opportunities, the possible use of land for agricultural production and eligibility for preferential tax treatment of land ownership.
These differences will produce variations in landowner decisions to develop or withhold their land, resulting in the fine-grained pattern of urban sprawl that is observed as development occurs at the periphery of urban areas (Boyce, 1963). Differences in the levels of future expectations may be important in accounting for variations in the patterns of residential growth between cities. Hypotheses are derived involving the relationships between expectations, urban sprawl, residential property values and densities of cur-rent development. Consider two identical urban areas with the same patterns of demand for residential development in the current time period. Considering only this current demand, landowners in comparable locations would obtain similar returns from current development in the two cities. The cities differ only in the levels of expectations of the landowners: In one city, only slow growth and low levels of future residential demand are anticipated after this current time period, while rapid growth and high demand are expected in the other. Thus, landowners in the first city will tend to have lower expected present values of returns from future development than their more optimistic counter-parts in the second city. There will, of course, still be variations in landowner expectations within each of the cities. When the landowners compare their initial expectations regarding returns from current development (the same in both cities) with the anticipated returns from future development, the patterns of decisions will vary between cities. Given the lower levels of expected future returns, current development will be more attractive to a higher proportion of landowners in the first city. The higher future demand in the second city will be more appealing, causing more of these owners to withhold their land in favor of future development. (This decrease in the supply of land for current development will produce an increase in land prices and returns from current development, enticing some of the reluctant owners back into the development of their land before an equilibrium is reached.) The more growth they expect, the greater their tendency will be to sit tight and wait for higher returns to their land. The withholding of land decreases the supply available for current development at any distance from the center. This will force the price for land up (also causing some additional land to be released for current development). In those cities that are growing more rapidly such as Ilorin, higher future expectations will force current land values up. A higher price for land will cause developers to use less land in the production of housing, substituting other inputs for land. Ironically, the faster growing cities, while having more sprawl, will actually be denser in those areas that are actually developed. The traditional assumption of employment being concentrated in a single center has become less tenable with the decentralization of commercial and industrial activity in most large urban areas. The development of multiple centers of employment near the edge of the fully developed portion of the city would not alter the desire of new residents to locate close to their places of work. However, the generally shorter commuting distances would lessen the resistance to locating at even greater distances from the center, increasing demand farther out and further encouraging dispersed development.
STATEMENT OF THE PROBLEM
Mega-global trends are changing the global economic order. From stimulating to growing the global middle class, population aging and technological trends - all of these changes have a significant impact on the built environment and the demand for housing and residential properties in the short and long term. According to recent UN forecasts, the world's population is expected to grow by 2.9 billion over the next 33 years, and potentially by another three billion by the end of the century. At the same time, the move towards cities is expected to continue, driven by economic, climate change and conflict motivations, as a result of which, 80–90% of people are expected to live in cities by 2100 (United Nations 2017). As population growth and urbanisation continue, cities are faced with a number of challenges such as air pollution, congestion, social issues and pressure on housing markets. The pressure on housing markets can be analysed from different perspectives. Looking at the issue from an inclusive perspective, the issue of housing and residential property value is a key element. However, when addressing the issue from a social and economic perspective, the focus lies more on risks like affordability, city competitiveness and social segregation. This study will seek to examine the effect of urban growth on residential property value as well as the implications of high residential property in the city of Ilorin.
OBJECTIVES OF THE STUDY
This study will be carried out to examine the effect of urban growth on residential property value. Specifically, the study will seek to:
- To determine the rate of Urban growth in Ilorin.
- To ascertain the relationship between the rate of urban growth in Ilorin and residential property value.
- To determine the effect of Urban growth on residential properties.
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