A CRITICAL ANALYSIS OF THE EFFECTS OF ECONOMIC VARIATIONS ON REAL PROP…
The real property market constitutes an integral part of the general business economy. The two sectors are so closely related that trends in the business economy may come from or result in changes in the real property market. This work is an attempt to gain an insight into the nature and conditions of the property market under the prevailing economic changes in Nigeria. The resulting problems which have contributed greatly to making real property management a difficult task are highlighted in this work. Hence, the purpose of this study was to critically analyze the effects of economic variations on real property management using Onitsha property market as a case study. The study was able to discover the major causes of economic problems in Nigeria and possible solutions were proffered. Estate Surveyors and Valuers were advised on how to deal with some of the effects of economic variation on Real Property Management. The study also sought to enlighten the public on the importance of the roles of Estate Surveyors and Valuers in the real estate sector of the economy. Recommendations were made to Estate Surveyors towards improving Real Property Management practice in Nigeria. Data on which analysis are based were mainly from administration of questionnaires, oral interviews, personal observations and collection of relevant information from textbooks, journals and papers. The population of the study was fifty (50) practicing Estate Surveyors in Onitsha. Out of these Estate Surveyors, forty (40) of them were drawn through stratified random sampling technique. Forty (40) questionnaires were administered; out of which thirty-
eight (38) were used for the analyses. Chi-square (x2) test statistics was used to test the hypothesis of the study, which states that there is significant negative effect of Economic Variations on Real Property Management in Onitsha. The result of the study revealed that economic variations in Nigeria have adverse effects on real property management in Onitsha. The test statistics showed that at 0.05 level of significance (X2 cal.=44.2500, X2 tab.=5.991), there was a significant negative effect of economic changes on real property management in Onitsha. The study revealed that the major cause of economic variations in Nigeria was over-dependence on Petroleum and its allied products at the expense of Agriculture and other sectors of the economy. Inadequate planning of various
government recovery policies worsened the situation in the market. These policies had adverse effects on per capita income of the people. There was no co-ordination in pricing system, therefore, the prices of goods and services increased discriminately. The deregulation of interest rate made borrowing for investment purposes very costly. Incessant political, social and religious hostilities disrupted Nigerian economy. Sometimes, problems in the global economy caused economic changes in Nigeria. The study identified the effects of these economic problems on Real Property Management as tedious rent revisions, under estimation of maintenance costs, higher incidence of rent defaults, stagnant rents, delayed maintenance, unrealistic forecasting etc. To stabilize Nigerian economy, more attention should be given to Agriculture and other sectors. The
government should come up with measures to solve incessant political, ethnic and religious crises which discouraged foreign investors. The principles of checks and balances should be fully implemented among the three arms of government to check the problem of mismanagement of public funds by those in leadership positions. Estate Surveyors and Valuers operating in a variable economy should analyze and recognize trends in the market to enable them manage economic fluctuations and crises.
1.1 BACKGROUND OF STUDY
The Nigerian civil war which took place between 1967 and 1970, disorganized all sectors of the economy. According to Okongwu (1986, p.11) if we exclude the civil war experience, cyclical swings in oil receipts exerted marked influence from 1974. The petroleum sector exhibited an increasing and dominant influence as regards contributions to government revenue, rising from 1% in 1960 to over
80% as of now. At the same time, partly because of the vagaries of oil, we have now forcefully rediscovered what we had really known all along: that this excessive reliance on crude petroleum exports, this essential replacement of the previous composite vector of “traditional” primary exports with the single, though more lucrative, crude oil vector, does not provide secure foundations for prosecuting deliberate development policy.
Much reliance placed on petroleum and its allied products was the main cause of our economic problems. Moreover, the gains from oil boom were not wisely utilized owing to lack of foresight. At a point in time, our economy became import and consumption oriented. So, when the oil glut hit, we were caught napping. The oil glut is a situation in the oil market where the oil supply substantially exceeds its demand. We became a debtor nation; fell from boom to recession and from grace to grass. The mismanagement of our foreign reserves and public funds and excessive government recurrent expenditure also contributed to our economic problems.
Government economic recovery policies in the short time worsened the situation in the market. Such policies include the Austerity Measure of 1982; Economic Emergency Programme of 1985; the Structural Adjustment Programme of 1986;
Second Tier Foreign Exchange Market; increase in Local Fuel Price to get more revenue for the government, Banning of some imported goods without giving a reasonable period of time to adjust, etc. These policies resulted to serious variations in every sector of the economy.
The study considered the effects of these changes on real property management with a special focus on the Onitsha property market.
1.2 RESEARCH QUESTIONS
The researcher intends to examine the following questions:
- What is the origin of economic problems in Onitsha as they affect real property management?
- What are the major causes of economic changes in Onitsha?
- Is there any relationship between the real estate economy and the general business economy?
- What are the effects of economic changes on real property management in
- Is there specialist in real property management?
- What are the major functions and roles of this specialist?
- What measures are to be taken by Estate Surveyors operating in a variable economy to achieve positive results?
- What procedures should be followed in real property management practice?
1.3 PURPOSE OF STUDY
Nigerian economy has been unstable since her independence in 1960 due to some factors. Instability in the economy has been provoking some changes in every sector. It is the purpose of this study to critically analyze the effects of economic changes on real property management with focus on Onitsha property market.
It is also the intention of the study to guide Estate Surveyors operating in a variable economy on the possible ways to cope with the situation to achieve positive results.
1.4 OBJECTIVES OF STUDY
The specific objectives of this research are:
- To investigate the major cause of economic problems in Ontsha as they affect property market;
- To suggest possible ways to revamp Onitsha real property market;
- To establish the relationship between the real estate economy and the general business economy;
- To ascertain the effects of economic variations on real property management in Onitsha;
- To encourage Estate Surveyors to always analyze the real property market to enable them manage economic fluctuations and crises;
- To emphasize the need for employing professional Estate Surveyors in both private and public sectors to offer advise and render property management services in order to make the life of the real property to last longer especially, at this time of economic problems.
1.5 HYPOTHESIS FORMULATION
For the purpose of verification and possible confirmation, this hypothesis is formulated and postulated as follows:
HO: Economic Variations do not have impact on real property management.
HI: Economic Variations have impact on real property management.
1.6 RELEVANCE OF STUDY
Having identified the major causes of economic problems in the study area, recommendations were made to boom the economy.
The study shall encourage the Estate Surveyors and Valuers in the study area to be conversant with the market to enable them manage the effects of economic changes on real property management.
The study shall also enlighten the public to appreciate and patronize the professional services of Estate Surveyors and Valuers which are not very well known.
1.7 SCOPE OF STUDY
The study traced the origin of the economic problems in Nigeria and suggested possible solutions. The policies of the government to revamp the economy led to economic changes. The effects of these economic variations on real property management especially, in Onitsha property market, are vividly emphasized. The relationship between the real estate economy and the general business economy was critically examined. The work reviewed the functions and responsibilities of a property manager; and also, the real property management procedures were demonstrated practically.
1.8 LIMITATIONS OF STUDY
Some factors militated against the success of this work, though the researcher endeavoured to accommodate them. Thus, some of the constraints inherent in the course of carrying out the research include, among others, the peculiar nature of real property market. It is not like commercial markets where one can easily come
face to face with both the buyers and sellers to get information he wants. In real property market, information are not easily circulated among Estate Surveyors. Vital information required by the researcher from some respondent Estate Surveyors were not collected due to pressure of work and other commitments facing them during the time the researcher required those information.