90% of housing units not affordable to average Nigerians

Ninety per cent of the so-called affordable housing units built in Nigeria before now is in gross mismatch with affordability and accessibility dynamics of an average Nigerian citizen, New Telegraph has learnt.

According to the Chairman, Value Chain Project Consultancy Limited, Pastor Joshua Egbagbe, there was no concerted push for intervention funds for the housing industry for low and medium income earners, hence the high cost of the so-called ‘affordable’ housing units.

Speaking on Housing Development Group’s platform in Abuja, Egbagbe pointed out that apart from disparity between low-income houses and affordability dynamics, the nation’s mortgage underwriting criteria were mostly “elitist” and booby-trapped to create sub-prime and delinquent mortgages at origination.

Reeling out some of the obstacles to affordable housing provisions, Egbagbe also pointed out that the public-private partnership (PPP) model in Nigeria was not functional due to the fact that most state governments reneged on their counterpart responsibilities of land and infrastructure provision.

According to him, regulators and referees have taken over the construction landscape, stressing the need for government to subsidise affordable housing for weaker links in the affordability matrix.

According to housing finance experts at the just concluded 8th Global Housing Finance Conference in Abidjan, Cote D’Ivoire, most important impediments to increasing affordable housing supply through public-private partnership (PPP) included 29 per cent of inadequate or absent legal or regulatory framework; 24 per cent of lack of political will; 19 per cent of absence of finance developers; 14 per cent of public sector lacked capability or was unwilling to partner with private sector and 10 per cent of private sector’s capability, but unwilling to partner with public sector.

They said that if government failed to provide the necessary support to aid affordability, private sector might not be able to deliver affordable housing.
Nigeria has shortage of 17 million housing units and will need to construct one million houses yearly for the next 20 years to bridge the gap.

Currently, the nation can only construct 100,000 housing units annually, which industry’s stakeholders described as ‘far cry’ from the number of houses required.

Apart from this, prices of houses being provided by both government and the private sector are beyond the reach of low-income Nigerians, who are in the majority of accommodation seekers.

Minimum wage in Nigeria still remains N18,000, while the price of a two-bedroom flat in any of the affordable estate is not less than N3.2 million.
Apparently worried by this disparity, Egbagbe urged the Federal Government to channel intervention funds to the housing sector to promote construction of affordable houses, adding that such intervention would boost national economic growth in the sector through a multiplier effect.

Managing Director, Oak Homes Limited, Mr. Kayode Olusanya, said that one of the challenges to affordable housing delivery was expensive cost of funds, suggesting that the Central Bank of Nigeria (CBN) should work something out for real estate sector to attract offshore funding.

He said: “If someone tells you that he wants to get a mortgage and he is looking at 20 per cent or 25 per cent interest, in four years he would have paid 100 per cent as interest. It is difficult to pay back such loan in four years.

“There is a gap that needs to be carefully monitored. We need to bridge the gap so that anybody that wants a home can get it at an affordable rate. We should be able to work something for each stratum of people in the society.”

Principal Partner, Ubosi Eleh and Co. Mr. Chudi Ubosi called on government to review the Land Use Act to give better access to land.

Credit: New Telegraph