By Alex C
The situation in Nigeria’s housing market has continued to worry observers as over 70 percent of the transactions in the market are on rentals. While home ownership level in the country is believed to be as low as 10 percent, a lot of Nigerians spend a chunk of their savings on rent.
Johnson Chukwuma, a structural engineer and real estate consultant, blames this situation on low mortgage access in Nigeria, explaining that people don’t have capacity to buy and so have to rent.
“If the 80 percent that is renting had access to mortgage, things would have been different because they would have bought instead of renting and the quality of their life would have been improved. For quality of life alone, something just has to be done about mortgage because there are many people who have capacity to buy but are renting,” he notes.
Nigeria has a very disturbing housing situation with a little above 10 million housing stock, 10 percent homeownership level, about 5.5 percent annual urbanisation rate, and a staggering housing deficit of 17 million units.
Chukwuma laments that Nigeria is the only country where a home-seeker may have about N5 million, an equivalent of $35,000, and yet cannot present it as down payment for a decent accommodation, explaining that “this is because something that you can call middle-class property starts from N20 million”.
Timothy Nubi, a professor at the Faculty of Environment Sciences, University of Lagos, says about N12 trillion is required to finance Nigeria’s housing deficit, adding that housing in the country is estimated to be 2.3 per 1,000 inhabitants with over 70 percent of the population lacking decent quality urban life.
Nubi, whose views were contained in a paper he presented at a recent forum organised by the Lagos State chapter of the Nigerian Institute of Architects (NIA), disclosed that more than seven cities in Nigeria have populations above one million, lamenting that the country has been lacking real estate-backed capital market instruments, significant social housing and new town development initiatives for several decades.
A recent survey report for 2012/2013 carried out by the National Bureau of Statistics (NBS) in collaboration with the World Bank, reveal that an average Nigerian household spent about N33, 373 a month on house rent, with payment for house rent being a major spender for Lagos residents.
With the prospect of increasing household formation as the Nigerian population grows to 400 million by 2050, this offers an opportunity for firms in the building material space to continue growing revenues, as developers race to meet the estimated 17 million housing deficit.