Housing deficit: Here’re fresh insights on facts behind the figures

Nigeria’s housing deficit, which is estimated variously at 17 million, 20 million, 22 million and lately 28 million units, has become a buzzword not only in the housing sector, but also in the economy as a whole. It has become a cliché that is fast losing its appeal.

It has become such a recurring decimal that there’s no serious economic discourse where reference is not made to it in such a way that no serious importance is attached to it any more.

But it remains a big dent in the country’s social stability, economic growth as well as development. This is because, to a very large extent, the government which is supposed to drive solutions to the problem, does not seem to be committed to the problem.

Though there are other extraneous factors, the major reason for the widening gap between housing demand and supply in the country is finance, which resides almost 100 percent in the government.

“To stem the national housing deficit, the country will need to produce an average of 550,000 housing units per annum for the next 10 years. The financial outlay for this annual housing target is over N5.5 trillion per annum,” Ahmed Dangiwa, Nigeria’s housing and urban development, revealed at an international housing show recently.

Matthew Ashimolowo, a pastor and real estate investor, took it further. He cited a World Bank report which says, “Nigeria will need to construct around 700,000 housing units annually for the next 20 years to meet the needs of its growing population,” adding that to produce these units the country requires an investment of N59 trillion over that period.

On the flipside, according to the minister, the country’s average annual housing production is about 100,000 units, mostly through prevalently informal, incremental self-construction dictated by the availability of excess household income, scarce savings or loans from friends and relatives.

To worsen this situation, the government’s budgetary allocation to housing has never been anywhere allocated N11.5 billion for the construction of 20,000 housing units for the Renewed Hope Agenda’s housing scheme.

Read also: Housing deficit solutions to headline discussions at Renewed Hope PPP summit

Besides finance, Nigeria faced with a huge population estimated at over 200 billion growing at about 2.52 percent per annum, the high urban-rural ratio of about 50 percent also growing at an astronomical rate of 4.3 percent per annum, and perennial unfavourable regulatory and macroeconomic factors.

“The combination of these unfortunate circumstances has resulted in a significant housing gap estimated at millions in the double digits,” Shehu Osidi, the chief executive of the Federal Mortgage Bank of Nigeria (FMBN), noted at a real estate forum in Lagos.

Osidi also cited a 2019 PwC study which posited that about 75 percent of the nation’s estimated 42 million housing stock falls below the United Nation’s criteria for permanent human occupation which speaks to the qualitative and quantitative housing deficit in the country.

“In addition, the nation’s dismal record of untitled land implies that about $300 billion, roughly 60 percent of national GDP is ‘dead capital’ as the owners cannot realise tangible earnings or utilise the assets to improve their economic status,” he said.

Osidi noted that the motivation for new home development is driven by housing demand, meaning that housing demand is a function of the available opportunities for mortgage financing as in most societies.

He lamented however that, in Nigeria, less than 5 percent of the population has the financial capacity for house-for-cash transactions, pointing out that “even where individuals can afford to purchase a house outright, economic prudence dictates that a mortgage facility which offers regular repayment by installment over a convenient length of time is preferable to tying down lump financial resources which can be more optimally deployed to alternative investment opportunities.”

Adeniyi Akinlusi, former CEO of TrustBond Mortgage Bank Plc, told BusinessDay in an interview that because of poverty which is endemic in the country and/or low income in both formal and informal sectors, very many Nigerians who need housing cannot afford mortgage loan even at 6 percent interest rate which is only obtainable by National Housing Fund (NHF) contributors.

Experts are of the view that the most potent factor fuelling increase in the housing deficit is urbanization as people, especially the younger generation of Nigerians, now flock to the cities in search of economic opportunities, straining available houses and other infrastructure.