Housing Finance

POSSIBLE SOLUTIONS TO UTILIZING CAPITAL MARKET DERIVATIVES IN HOUSING DELIVERY OF NIGERIA EMERGING MARKET

 

It is no doubt that capital market and it derivatives in housing delivery is still at its early stage of development in Nigeria and the current situation of the market is not encouraging to make it a favorable finance source for housing development at a scale and affordable rate.

It won’t be farfetched to note that so many challenges are hindering capital market derivatives from been used for housing finance and delivery in Nigeria ranging from policies to others factors and that awareness of the imperativeness and benefits of financing through the capital market is lacking even as this seem to be one of the major way to liberate people from their shackle of financial difficulty for real estate development, a synergetic effort between the market and developers is missing.

Housing supply in response to its demand remains a daunting challenge in Nigeria especially and finance has long been identified as one of the major issue hindering stocks delivery. Effective sources of housing finance are the only way to walk out of the cogwheel of this problem which the capital market seem to be a way out.

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WHAT IS THE WAY OUT?

(i) The capital market option should be considered by developers and investors in the housing market and be adequately explored since this can contribute over fifty percent of the required funds needed for housing delivery in any economy.

(ii) The capital market operators should channel funds into real estate development and investment to aid housing delivery in Nigeria.

(iii) A synergetic effort should be created between the capital market and real estate developers this will enhance effective housing delivery in Nigeria.

(iv) The policies of government on investment of capital market products and the condition required for borrowing should be made flexible and a bit liberal for real estate firms.

(v) An enabling environment also needs to be created for both the operators in the capitals market and the real estate developers to ensure optimum service delivery.

(vi) The real estate developers firms should also see it as a matter of importance to create or form alliance for them to be effective in their operation and to gain more recognition and trust as well as access to the capital market funds instead of the present finance sources.

(vii) An enlightenment programme is also required from the government and the capital market regulators on the available products/derivatives for housing finance in the market.

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CONCLUSION

The housing industry and the capital market should accept the reality that there exists symbiotic relationship between available finance for housing and housing stocks. Events over the years have shown significant positive relationship between capital market derivatives and housing delivery in Nigeria. It has also been a recognized fact that developers of real estate are not adequately exploring the capital market using their derivatives for effective, adequate and affordable housing delivery and it has been perceived that the Nigerian capital market seems to be losing out since the capital that is supposed to be invested in this laudable venture (real estate) is been tied down and used for other ventures that are not as profitable and secure as the housing project.

However, if the above suggestions are been headed to and proper ways of actualization are carefully mapped out, capital market derivatives will be an effective tool in housing delivery of Nigeria’s emerging market

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