Now that the reality has dawned on us, we are now building the kind of houses that the market will easily accept. The houses being built today are more affordable than before. Building houses for the high-end market today is becoming almost impossible to either rent out or sell.
On the side of the consumer or the buyers of our houses, unlike before when people look at the size of their families to think of the kind of houses they should take up when they cannot really afford it. But now what buyers of our houses are looking for is what they can easily pay for, either immediately or over time.
So, we are now meeting at a good point, we building what they need and they getting to the market and seeing what they can afford. From that I can say that 2019 will be looking good because that is the year when supply will be reasonable enough to meet an encouraging demand.
The government I think has come to realize that the basic need of an average human being is shelter. Though this has been on the concurrent list of the Constitution, but government has not been too serious about it.
With the Family Home Fund, which is set to provide liquidity for construction finance and liquidity for the mortgage companies; I think 2019 will look much better.
But government has to look into enforcement of the law. We got the Administrative Order that the housing subsector should be exempted from paying VAT. Take for instance, you are not expecting me to buy a house of N5million and you are asking me to bring about N250,000 as VAT. How much then is the profit. Those are part of the things that make cost of housing high.
But giving an administrative Order is not enough. We want to see enforcement and how they will play out. Government also has to assist to reduce all related charges in housing development.
Lagos for instance, is approaching housing development from a better angle in the sense that the building plan approval fee for houses within a particular range, that is, houses that are less than N8million is reduced.
So, we want other state governments to begin to look in this direction so that fees that are being paid in the course of construction are being reduced. The last area I would want government to look into is in the area of availability of land. I know that some state governments are providing it under the private public partnership (PPP) programme.
However, we know that the PPP terms are still not favourable to affordability in the sector. For instance, under the PPP approach, the Federal Government approach is that they will take 30 per cent of the profit.
So, they should make terms that are friendly and people oriented because output is a function of input. If the cost of putting all these houses together is on the high side, it is obvious that the selling price will be high.