NEED FOR COLLABORATION AMONG STAKEHOLDERS IN THE HOUSING FINANCE / REAL ESTATE DEVELOPMENT SECTOR
Despite growing optimism and bright forecasts following the introduction of various investment-friendly policies by the government to drive the growth of the property sector in the past decade, the sector’s performance in 2017 was rather disappointing for the housing finance / property development industry in general, and for the federal government in particular.
The Nigerian Constitution guarantees every citizen the right to decent accommodation, but the state has largely failed in securing this right amid rapidly rising demand. Demand is driven not just by national population growth, but particularly by the influx of domestic migrants to the industrial heartland of the country – Lagos, as well as to the Federal Capital Territory – Abuja.
Nigeria requires approximately 800,000 new housing units every year, according to numbers being thrown around. In addition, the country needs to address a backlog of some 17million units, which will provide decades of work for real estate developers. High mortgage rates, down payment requirements, taxes and recordation costs, and the increase in building raw material prices continues to make it even more difficult for middle-low income consumers to own a home in Nigeria. Another obstacle is the poor implementation of deregulation policies initiated by the federal government at state/local government level. Most local governments complicate or delay the permit application process and impose illegal levies on housing projects.
Robust data is fundamental to successful policy formulation for Affordable Housing. In Nigeria, budget deadlines and political decisions force policymakers to endorse programs without a system for monitoring and evaluation.
Private Sector Stakeholders, in particular, must COLLABORATE and support all efforts towards the establishment of a Housing and Real Estate Data Bank, whose primary role is to collect, collate and analyze data on housing supply and demand and serve as a think tank for the housing stakeholders: public and private housing providers, academics, and civil society organizations.
In addition, the Mortgage Banking Association of Nigeria (MBAN) must COLLABORATE with regulatory authorities with a view of engaging the services of “THOROUGH BRED” mortgage experts who will be able to provide international best practices that strengthen credit assessment, mortgage underwriting, and risk management practices.
Furthermore, it has been established that modular structures, where major components for walls and roofs are produced off-site and assembled on-site, can reduce both the cost and time of construction. This should be rigorously pursued.
Finally, sluggish advancement in the provision of low-cost housing could be blamed on red tape and graft. As mentioned earlier, affordable housing policies are initiated at the national level, while their implementation rests largely with state & local authorities, and coordination between the two levels of government is often left wanting. Real Estate Developers continue to complain that overlapping regulations and other bureaucratic hurdles affect particularly the low-cost segment, driving a lot of companies to alter their focus to the middle-income segment instead. Most, however, remain committed to the low end of the market.