Tuesday, July 02, 2016 9:59AM /FBNQuest Research
Nigeria’s housing deficit stands at 17 million units and the estimated cost of bridging this gap is N59.5trn. Industry estimates suggest that about 100,000 new houses are built each year in Nigeria, compared to estimated demand of 700,000 units.
The FGN recently disclosed plans to build 360 houses in three pilot states, develop a “Rent to Own” housing scheme for low-income earners and incorporate a new housing model into the National Building Code. These three initiatives are part of its housing sector roadmap.
Through this roadmap, the FGN seeks to construct spacious apartments. The one-bedroom apartments are set to be 60 square metres, meanwhile a standard apartment similar to this is an average of 30 square metres.
There has been delays in project take-off mainly due to poor responses from state governments in providing land for the housing scheme. The housing ministry revealed that only seventeen states have been compliant in this regard.
Another issue slowing down progress is minimal capital expenditure for the sector. From this year’s budget, only N36bn has been allocated to housing; this is not sufficient to tackle the housing deficit. Partnering with the private sector as well international development bodies is essential to bridge the gap.
To this end, the FGN has partnered with Shelter Afrique, a pan-African finance institution, focused on real estate development to construct 5,000 housing units. The initiative is expected to deliver one bedroom apartments at N1m each; payment structure will be spread over an undisclosed time-frame through a mortgage facility.
Industry sources suggest that due to the country’s housing deficit, tenants spend about 60% of their disposable income on rent compared with 30% recommended by the United Nations. Given the current squeeze on consumers’ pockets this has become more difficult for Nigerian nationals and is putting immense strain on the country’s property market
Nigeria’s mortgage market needs to be developed to assist in delivering affordable homes across the country. The Nigerian Mortgage Refinancing Company (NMRC) has injected about N6bn and is currently evaluating 5,000 mortgages. This is laudable; however, it is not sufficient.
To drive growth, social intervention initiatives such as mass housing are required. Apart from creating shelter, the ripple effect it has through its potential job creation is vast, capable of lifting low-income earners to the middle class.
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