Demand for new housing to rise on economic recovery — report

Despite already known and expected challenges in the housing sector, locally and globally, demand for new housing, either for purchase or rental, is expected to rise on the back of economic recovery and growing housing income, a new report has said.

Besides rising costs of materials which is impacting significantly on the quality and quantity of housing being put on the market, there is also the challenge of rural-urban migration in which 23 million more rural dwellers are anticipated to double the number of urban dwellers in Nigeria by 2050.

The new report known as ‘Nigeria’s Housing Construction and Rental Activities, Cost Benchmarking and Impacts on the Economy’ conducted by Centre for Housing Finance in Africa ( CAHF) notes, however, that the housing sector growth potential will only be fully realised if significant, concerted changes are made to Nigeria’s housing strategy.

It notes further that, from the delivery perspective, a major shift is required in the depth ( affordability) and breadth (numbers of units) delivered by all development actors in the country. This is an emphasis on the gross under-supply in Nigeria where the projected number of deliveries, about 100,000 units, is a far cry from the projected 1 million units per annum.

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The report gives deeper insights into Nigeria’s housing market using CAHF’S Housing Cost Benchmarking ( HCB) and Housing Economic Value Chain ( HEVC) methodologies. These assist to identify areas of concern and to propose strategies to improve the functioning of Nigeria’s housing sector and consequently assist to improve the housing outcomes of all Nigerian households.

Besides Lagos, Nigeria, there were four other African cities and countries included in the report. These are South Africa (the least cost), Dodoma, Tanzania, Kampala, Uganda and Nairobi, Kenya (the highest cost).

The report noted that, comparatively, a small number of new accommodation units are being produced formally each year, many of which stand abandoned, vacant, or incomplete due to a lack of effective demand from Nigerian households.

“Comparatively, a small number of new accommodation units is being produced formally each year, many of which stand abandoned, vacant, or incomplete due to a lack of effective demand from Nigerian households,” the report says.

This means that the vast majority of occupied urban housing units will continue to be produced informally, either with the assistance of contracted informal builders or through the direct efforts of the members of households themselves.

According to the report, the vast majority of new housing opportunities will continue to be provided through basic development by existing landowners to accommodate the demand for small, relatively affordable units in all major urban areas.

It advised that policies and incentives to encourage and facilitate the creation of a new range of more affordable incremental housing opportunities were required, including basic access to land and services, incremental housing opportunities and investment in infrastructure that creates a better urban environment for private housing investment and growth in housing construction and rental markets.

Speaking about HCB, the report advised further that important shifts must be made in the approach to housing delivery itself, listing such important actions as improving access to titled land, the removal of constraints throughout the development process, improving access to bulk infrastructure and combating the negative impacts of corrupt practices, All these, it noted, are critical if local and foreign direct investment is to be crowded into Nigeria’s housing sector.