Problems and Prospects of Forward Sale in the Nigerian Housing Market: A Critique of Policy and Modus Operandi

Abstract

One way of dealing with the challenge of demand uncertainty in property market is the use of forward sale. However, despite the huge demand for housing in Nigerian urban centre, it appears that the strategy is not popular with the demand base as expected. This study therefore examined the challenges of forward sale in the Nigerian housing market. This was achieved by reviewing the institutional policy provisions and operational guidelines within which forward sale transaction is conducted in Nigeria. Existing studies in this regards were reviewed while the opinion of three categories of respondents, the developers, buyers and estate surveyors and valuers in the Metropolitan Lagos State were obtained with the use of structured questionnaire. The percentages of options of responses were ranked. The study found that while developers prefer to harness the benefits of forward sale optimally, buyers are reluctant to use the method. Different challenges were responsible for this situation amongst which is the lack of policy protection for the buyer's thereby exposing them to developer's default, poor construction quality or delayed implementation. It was suggested that government regulate forward sale market to improve buyer's confidence thereby providing developers with unhindered access to development fund at no cost.

Influence of Critical Success Factors (CSFs) of Housing Co-Operative on Housing Provision in Ogun State, Nigeria

“…In contrast to the submissions above, Oloke et al [3] observed that the popular belief that co-operatives involved in housing provision have done well is empirically unsubstantiated and went further to describe the success rate of their contribution as unimpressive. The author noted that the co-operatives were more successful in granting loans to individual members which invariably led to the actualisation of their privately-owned projects and further led to identifying the need to improve co-operatives' contributions to housing provision because of their success rate which was found to be less than 50%.…”

“…These policies gave recognition to housing co-operatives as a major avenue for the achievement of sustainable delivery of housing units and also identified housing co-operatives as one of the key strategies through which the huge capital outlay required for the achievement of home-ownership, especially for the lowincome earners could be sourced. However, some studies [1][2][3] have suggested the need to enhance the contributions of cooperatives to the delivery of housing in Nigeria without stating specifically how this could be achieved; hence, the need for this study.…”

Adoption of pre-letting and pre-sale financing arrangements for real estate development in a developing economy: an assessment of the influencing factors

“…In Nigeria, the arrangements have been identified among other housing delivery strategies being employed (Oloke et al, 2017;Shiyanbola and Olaleye, 2019). Oloke et al (2017) conducted a study that identified factors influencing the adoption of the arrangements, but only utilised corporate development firms, which represent one of the two major private players in Nigeria's real estate development industry. The study excluded members of Real Estate Development Association of Nigeria, which constituted larger proportion of private development firms.…”

“…2.2 Factors influencing adoption of pre-letting and pre-sale financing Oloke et al (2017) identified nineteen factors affecting the implementation of pre-sale financing in Nigeria. These, among others, include low-quality construction work; usage of inferior building materials; finishing mismatch; decoration mismatch; inaccurate, insufficient and misleading information; and lessees or buyers' default.…”

“…The studies suggested that with the demand side becoming the financial of the supply side in pre-letting and pre-sale market, buyers who are risk adverse would opt-out because of the market risk and capital finance risk that the arrangements transfer on them. Leung et al (2007) and Oloke et al (2017) mention the problem of housing space shrinkage, higher building defects, features mismatches and exaggeration of saleable areas as part of factors restricting the rate of adoption of the arrangements. Furthermore, Ibrahim et al (2015), Jadalhaq (2017) and Zhou et al (2018) identified fear of sudden development default or abandonment, lack of standardised real estate legislation/procedure and lack of perfect market information among factors impeding adoption of pre-letting and pre-sale financing arrangements.…”