Certain structural dislocations in the financing structure for the housing sector have been identified, raising concerns among real estate stakeholders.
Correcting these structural dislocations, the stakeholders say, is necessary for the federal government’s planned construction of 300,000 mass housing and rural roads to be effective and also to be able to have the desired positive impact on the sector and the economy as a whole.
“Federal government’s decision to build 300,000 houses around the country and also to spend N2 trillion on rural roads construction is a welcome development that will positively impact the economy in various ways,” Femi Akintunde, GMD, Alpha Mead Group, noted.
“First, it is a form of reflationary measure that will stimulate economic output through increased spending in housing and infrastructure development. Such investment will create large scale employment, increase the stock of housing and the provision of additional road infrastructure that will help to improve connectivity and further ease our logistics challenges,” he added.
But he has his concerns as noted above. He advised that any available fund to be provided by the government must be designed in a way that will be targeted to impact the primary mortgage banks directly on the demand side and the real estate developers on the supply side.
He reasoned that, unless the developers have access to reasonably priced funding, they will not be able to create sufficient stock of quality mortgageable housing stock that the primary mortgage banks (PMBs) could finance.
“Where the developers continue to struggle to produce the houses under the current very harsh and unfavourable economic condition without any form of support from the government, they will produce and sell at the most economically viable price that will not be affordable to an average Nigerian,” he said.
Akintunde added that where the purchasing power of the customer also remained weak due to challenging economic environment where Nigeria currently finds itself, there will be weak demand that cannot spur the supply.
He explained that such weak supply was the cause of instability in the supply chain structure of the real estate industry. “We have to rebuild the system from the bottom up in order to be able to achieve a sustainable growth and development of the housing industry,” he said.
He reasoned further that unless there is sufficient liquidity to support the PMBs, they would lack the capacity to create good mortgages for the secondary mortgage institution, the Nigerian Mortgage Refinance Company (NMRC), to refinance.
“The current situation whereby the NMRC has the fund but is unable to deploy it to refinance mortgages from the PMBs due to their limited capacity to create the mortgages in the first instance is a misnomer and this has to be corrected with every sense of urgency in order for the country to make any meaningful progress towards bridging the wide housing gap that has been identified,” he said.
