As the supply side is dominated by a lot of housing interventions and projects – mostly from the private sector – it is also expected that the demand side is buoyant enough to acquire the houses. But that is never the case in the Nigeria housing sector. On the demand side, there is an enormous material gap which leaves intending home owners with very slim windows of owning the houses that are supplied in the market.
Houses that are supplied are typically expensive because the developers have built them for profit making purposes. On the other hand, the demand side is filled with people who are mostly in the low income category – barely rich enough to afford those expensive homes not to mention high interest mortgages.
On the demand side, even with the lowest-priced homes, affordability is still a problem for many Nigerians due to the inability to access finance at affordable rates. There is also the informal sector who cannot access traditional finance easily. Through strategic partnerships, the government and stakeholders should be able to drive creative products which empower these groups with the right structure that leads to homeownership.
The Nigerian housing section has an affordability task. Housing provision is directed mainly at the middle- and high-income section of the populace that can either pay cash or access mortgage finance from the banks. The sheer proportion of the low-income people, nevertheless, proposes a crucial growth opportunity for developers and investors if they are adequately innovative. For the fact that the long-term finance for housing development is not available, this compels manufacturers of housing to recover their funds within the shortest possible time. In these circumstances, the development of non-mortgage housing finance products, such as housing microfinance, could be very usefully explored.
According to the President of Real Estate Developers Association of Nigeria, Ugochukwu Chime, there are a number of fundamental issues that need to be addressed to make home ownership easier.
He said houses will remain expensive and beyond the reach of intending buyers if the transaction time and transaction cost for the developers are unresolved. ‘’Why should I build a house for 6 months, but wait for another three or five years to get the title. The problem is not just about finance, but mostly about the bureaucratic processes. We need to synchronise and reduce the transaction time and the transaction cost involved in land administration. That is the area where the national housing finance program were able to identify the problem, and for that I give them kudos. Working with NMRC, they were able to discus with land owners, CBN, and developed a modern mortgage and foreclosure law in defining the interface point between finance and land which strengthens the value chain,’’ he said.
Chime believes that if all players in the value chain can be on the same table where strategies for resolving these problems are known, it can establish a support system for those in the demand side to have access to multiple and affordable home ownership options.
He said that the character of the demand side is determined by the supply side. For him, resolving the problems in the demand side would ultimately start from resolving the problems in the supply side.
‘’Demand is already regulated. There is a gate keeper for the demand side which is the Central Bank of Nigeria. But there is no gatekeeper for the supply side, and it ought not to be so. There should be coherence and an ordered system where all stakeholders are on the same page about what needs to be done and how it should be done,’’ he said.
Several governments in developing countries have been using demand-side programs to increase access to housing services among the poor. From the perspective of a social safety net, the main justification for providing housing assistance is that adequate shelter is a basic need that governments have a responsibility to help to fulfil, especially during times of hardship. In transition countries, assisting the poor with their housing-related expenditures can mitigate the hardship caused by planned price increases. The introduction of housing assistance in such cases makes it possible to implement reforms such as price increases or deregulation.
Reacting to the challenges in the demand side, the CEO of NISH Affordable Housing Limited, Yemi S.K Adelakun said those who need affordable housing also have a role to play. He said home seekers can effectively forge savings scheme towards equity contribution.
‘’If people can put themselves together in cooperatives, it will be easier and cheaper to own houses. What they need is to build their corporate governance to enable trust and accountability. It is a model that has worked in many countries in the world including African countries. Government would only need to create an enabling environment for such schemes to thrive and achieve their aims,’’ he said.
He also recommended the adoption of innovative technologies that can build fast and cost effective houses. According to him, there are new technologies that can build multiple houses a day, and these technologies and innovations should be unveiled for popular knowledge.
Another direction for the government is to introduce more interventions like the Family Homes Funds which is addressing the demand side with innovative ideas like Rent to Own and others. This is very expedient because affordable homes not only provide a fundamental human right, providing families with the right environment to thrive and a greater overall sense of living but it is also a major driver of national growth.
