Here’s what Nigeria can learn from China on affordable housing

Besides lending money to, and undertaking most of the roads and rail projects in Nigeria by its government and engineering firms respectively, China also has a lot that Nigeria can learn from it on how to provide affordable housing for its homeless people.

A country of over 200 million people, Nigeria has over 20 million housing units deficit according to conservative local estimates. The World Population Review in 2023 put the number of homeless people in the country at 24 million, making it the country with the world’s largest number of homeless people.

These statistics derive from the country’s inability to build right and build cheap through the use of modern technology and alternative building methods that enable builders at both public and private sector levels to manufacture housing for the country’s expanding population.

Government in Nigeria, unlike the one in China, spends time reeling out impossible measures for housing delivery most of which end up at pronouncement level—no implementation; no follow through.

A recent Reuters report reveals that, just recently, Chinese policymakers unveiled a number of support measures for the property sector, including a nod to local governments to buy some unsold apartments and turn them into affordable housing.

According to the report, the authorities hope that, over time, improving access to affordable housing could provide utility to some of the excess construction undertaken in the boom years and that it may boost domestic consumption by lowering households’ needs for savings.

In China, affordable housing is categorized into three. These are public rental housing, government-subsidised rental housing and homes with shared ownership. Ownership or access to each of these house-types depends on what the country calls eligibility.

The Reuters report explains that public rental housing targets low-income families in urban areas, government-subsidised rental housing is provided for new urban residents and young people while homes with shared ownership target people with higher incomes who are still unable to afford a home. Some cities offer such housing through programmes to attract tech talent, teachers and medical staff.

Unlike Nigeria where government competes and, in some cases, crowds out the private sector with their house developments and pricing, the government in China does not stop at just providing the houses, it also issues guidelines on rent levels and apartment sizes vary depending on the jurisdiction.

For instance, in the southern city of Changsha which is home to 10.5 million, public housing rents have to be, at least, 30 per cent lower than market rates. Most apartments cost 360 to 720 yuan (US$50-US$100) per month, depending on location, and they are smaller than 60 square metres in size.

“In Shanghai’s cosmopolitan Yangpu district, a 50-64 square metre one-bedroom public rental apartment costs 3,899-5,491 yuan per month, around 20 per cent lower than market rates while government-subsidised rental housing usually comes at up to 90 per cent of the market price in the area for apartments up to 70 square metres in size,” the report says.

The report quotes government-backed media, The Paper, as saying that a makeshift hospital in Beijing’s Chaoyang district was turned into government-subsidised rental housing last year, with the monthly rent set at 1,200 yuan, adding that local housing bureau guidelines say homes with shared ownership should cost less than commercial houses of the same quality and type in the surrounding areas.

Bruce Pang, chief China economist at Jones Lang LaSalle (JLL) estimates prices of shared ownership homes are 10-20 per cent lower than market prices, and home buyers usually own no less than 60 per cent of the apartment, while local governments own 10-40 per cent.

In Nigeria, after land, funding is a major impediment to delivering affordable housing. But in China, there is well structured system for funding affordable housing. According to the Reuters report, cities with more than 3 million people are expected to take the lead in developing affordable housing.

The report notes, however, that local governments had been providing most of the funding, but as the property crisis has dealt a blow to fiscal revenues, central authorities are stepping in, pointing out that the finance ministry, in November last year, frontloaded 42.5 billion yuan (US$5.87 billion) in subsidies for 2024 for urban affordable housing projects.

“The central bank said in January it increased the quota of pledged supplementary lending (PSL) funds by 500 billion yuan for affordable housing, urban renewal and infrastructure,” the report says.