Fashola canvasses industrializing development to make housing affordable
Fashola who was the keynote speaker at the just concluded Abuja International Housing Show (AIHS) in Abuja, the federal capital territory, explained that industrializing the sector would not only drag down the cost of construction, material wise, but would also create jobs for those involved in the housing value chain including input manufacturers, professionals and artisans.
But stakeholders in the sector, who affirmed the minister’s proposition, argued that the problems and challenges of housing development in the country find explanation more in government’s failure to either initiate housing policies and programmes or to implement existing ones.
“When you look at housing, you see that it is not something that government can look away from because it is very important for various reasons. You can see the contribution of real estate to GDP which is about 7 percent; you also look at its effect on job creation, quality of life of citizens”, the stakeholders noted.
It is an established fact that, of the basic needs of human beings, after food, the next thing is shelter. A man that does not have a home cannot be productive because his heart and mind are not at rest.
Housing also impacts on security because a man that does not have a house lives on the street and becomes a security risk to every other person. He is vulnerable to attack and is also ready to attack other people out of anger and envy.
These are part of the reasons the stakeholders insist that government must perform its duty to make housing affordable by providing infrastructure and coming up with a policy framework in the financial sector that will make mortgage accessible and affordable through a significant reduction in interest rate.
“The housing market behaves in a particular way; it gravitates where there is effective demand. Government should recognize that the weakest demand comes from the low end market and so should direct regulatory system towards that end with a view to making a policy to address that problem”, said Femi Adewole, managing director, Shelter Afrique, Kenya.
Adewole Added that the government should also adopt the zoning system through which it would discover areas where housing need is highest and the type of housing that they need just as it should impose heavy tax on houses that are unoccupied to discourage further development there.
Hakeem Oguniran, outgoing managing director of UPDC, agreed , but advised that developers should look away from the traditional way of sourcing construction finance from the banks with their high interest rate.
“From my experience as a developer, finance constitutes about 15-18 percent of construction cost”, he noted, advising that developers should source funds from the capital market by raising bonds which reduces interest rate and, by extension, reduce the price of houses.
Land is another aspect of housing that government should do something about in order to make housing affordable. This, it was noted, also constitutes about 20 percent of construction cost. Government was asked not to see land as a revenue generating venture for the government so that it should not be more than 5-6 percent of construction cost.