Project – Evaluation of the relationship between household income and housing choice

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Household income is a measure of the combined incomes of all people sharing a particular household or place of residence. It includes every form of income example, salaries and wages, retirement income etc. Average household incomes need not map directly to measures of an individual’s earning such as per capital income as numbers of people sharing households and number of income earners per household can vary significantly between region and over time.

Average household income can be used as an indicator for the monetary well-being of a country’s citizens. Mean or median net household income, after taxes and mandatory contributions are good indicators of standard of living because they include only disposable income and acknowledge people sharing accommodation benefits from pooling at least some of their living cost.

Housing affordability is concerned with the relationship between housing costs and household income. Yates (2007) defined housing affordability problems as the result of housing cost for both purchasers and renters increasing faster than household income. The problem for household is when living cost is perceived to be too high in relation to household income. The perception of income is not enough to cover housing costs and non-housing expenditures (Williams, 1990).

Housing choice is action taken by households to decide on their choice of house. This includes tenure, duration, type of house and amount of rent payable. Once households have reached a considerably accepted socio-economic status, choice of location of the house and neighborhood becomes paramount. Public houses are perceived for low income household and younger household are more likely to participate in private housing market. The quality of local public goods influence house price and this indicate that households care for the general upkeep of the neighborhood as well as the distant of schools and town centers (Keit and Zabel, 2008).

Addne (1999) claimed that a house is more than a shelter with all the requisite amenities and represent an important status, Symbol and personal investment. Due to this, housing choice is important to households

There is a significant relationship between household income and housing choice. This was suggested by Mattock and Vigdor (2008) that income increase at the high end of the distribution and can raise house prices paid by those at the low end of the income distribution. The type of accommodation of every household depends largely on the level of income of such households.

1.2 Statement of the Problem

The problem for household is when living cost is perceived to be too high in relation to household income; this due to inequality in income distribution. The prices of houses in Owerri North Local Government Area of Imo state poses an unbearable burden on household income which makes housing affordability very difficult. The perception of imbalance of housing cost and non-housing expenditure clearly pose a problem that is related to household income. Therefore, the study seeks to unravel the relationship between household income and housing choice in Owerri North L.G.A of Imo state.

1.3 Aim and Objectives of the Study

The aim of this study is to evaluate the relationship between household income and housing choice in Owerri North Local Government Area of Imo state/

The objectives of the study are as follows:

1. To identify the income status of households in Owerri North Local Government Area of Imo state.
2. To examine the types of accommodation occupied by those households with respect to their income level in Owerri North Local Government Area of Imo state
3. To ascertain whether household income affects the choice of housing Owerri North Local Government Area of Imo state.

4. To evaluate. The percentage of income currently allocated to housing by households in Owerri North Local Government Area of Imo state.

1.4 Research Questions

1. What is the income status of households in Owerri North Local Government Area of imo state?
2. What types of accommodation are occupied by those households with respect to their income level in Owerri North Local Government Area of Imo state?
3. Does household income affects the choice of housing in Owerri North Local Government Area of Imo state?
4. What percentage of income is currently allocated to housing by households in Owerri North Local Government Area of Imo state?

1.5 Research Hypothesis 

The following hypotheses are formulated in respect of the study.

HO: there is no significant relationship between household income and housing choice in Owerri North L.G.A of Imo state.

1.8 Definition of terms

The operational terms used frequently in the context of this work are denied below:

1. HOUSEHOLD INCOME: This refers to a measure of the combined incomes of all people sharing a particular household or place of residence (Homby,1989)
2.  HOUSING CHOICE: This refers to action taken by households to decide on the type of house to occupy in respect to their income (Williams, 1990).
3.  HOUSING AFFORDABILITY: This refers to persons ability to afford household expenses (Payne, 1984)
4. INCOME: This is defined as the consumption and saving opportunity gained by an entity within a specified time frame, which is general expressed in monetary terms (United States legal definition).

Project – Evaluation of the relationship between household income and housing choice