Skip to main content

Worries as rentals account for 80% of housing market transactions

The situation in the Nigerian housing market continues to worry observers and players as over 80 percent of the transactions in the market are on rentals. An unconfirmed report has it that home ownership level in the country is as low as 10 percent, meaning that a lot of people are renting.
The situation is such that, in the cities, one person who owns a block of 10 flats accommodates, at least, three persons in each flat, meaning that there are 30 or more people tied to only one landlord.
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 forum organised by the Lagos State chapter of the Nigerian Institute of Architects (NIA), also 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.
Emeka Eleh, former president, Nigerian Institution of Estate Surveyors and Valuers (NIESV), agrees, insisting that social housing is critical but has to involve government. “If government is talking about housing for all, there is no way it will not have social housing component,” Eleh said in an interview with journalists in Lagos.
The Federal Housing Authority (FHA), he noted, was established to provide social housing, pointing out that the authority should be seen to be performing that function. “You cannot achieve an equitable society without providing for those who don’t have, those who lack the basic things they should have,” he says.
According to him, even though the housing sector is better driven by the private sector, government still has to enable equitable distribution of housing to ensure that everybody is properly housed, stressing that there has to be an element of social housing that is encouraged by government because this is what is done all over the world. “In India, for instance, there is the Council Flats with all manner of social housing components,” he says.
On how government can enhance access to housing, he explains that it could do that by giving people land title without charging too much money; providing mortgages; and providing infrastructure so that developers don’t have to spend money on that.
Chuka Uroko

Comments

Popular posts from this blog

SURVEY OF PRICES OF PROPERTIES ON THE ISLAND

Sales price Rental per annum Lekki Phase 1  3 Bedroom flat N45m – N50m N2.5m – N3m 4 Bedroom wing of duplex  N70m – N80m   N3m – N4m Agungi 4 Bedroom detached house N45m – N50m N2.5m 3 Bedroom flat N40m      N1.5m – N1.8m Chevy view 4 Bedroom terrace house N42m N2.5m 3 Bedroom flats  N35m        N1.6m Crown Estate 4 Bedroom detached house  N30m – N40m  N1.5m – N2m Thomas Estate, Ajah 3 Bedroom flat N25m   N750k – N800k Abraham Adesanya 3 Bedroom bungalow  N12m – N14m N700k – N1m 2 Bedroom bungalow N11m – N12m  ...

Quick fixes for quick profits in real estate

It has been said several times that ‘ideas rule the world’ and this holds true in real estate investing as well. We want to examine a time-tested idea that guarantees quick turnaround time and good returns on investment in most real estate markets. We’ll be examining guidelines for making a good return in rehabilitating and selling properties. First, you need to find a property that is in need of repairs or renovation but is located in a good area. 

Nigeria Central Bank’s decision on CRR to have ‘shock effect’ on money market – Rewane

The MPC increased the already controversial Cash Reserve Ratio on public sector deposits from 50 to 75 per cent The decision by Nigeria’s Monetary Policy Committee, MPC, to increase the already controversial Cash Reserve Ratio, CRR, on public sector deposits from 50 to 75 per cent would in the short term, have a shocking effect on the nation’s money markets, Bismarck Rewane, a finance analyst and Managing Director, Financial Derivatives Company, has said. “The impact of this decision on money markets will be a shock effect in the short run and a re-turn to equilibrium rates within six weeks”, Mr Rewane said in a report analysing the MPC’s decision. He said the first time the MPC increased the CRR (the percentage of funds banks have to keep with the Central Bank) on public sector deposits in August 2013, an estimate of N1trn or 6.84 per cent of Money Supply (M2) was debited. “At that time, the impact was a spike in interbank rates of approximately 800 basis points (bps...