House price, rent soar despite govt’s schemes

Despite numerous intervention programmes or schemes initiated by the government in the housing sector, house price and rent remain high, making the country rank among the most expensive housing markets in the world with a very active rental market.

There are obvious supply issues amid surging demand. The gap is so wide that a sizeable number of the country’s population struggle for space in the housing market.

Besides the Federal Mortgage Bank of Nigeria (FMBN) and the accompanying National Housing Fund (NHF) which were aimed to make housing finance accessible and affordable to low-income earners at 6 percent interest rate, other interventions have come on stream.

These include the Nigerian Mortgage Refinance Company (NMRC), Federal Integrated Staff Housing (FISH), Family Homes Funds (FHF) among others. All these have failed to translate to increased housing stock and affordability in the country.

The implication is that the country’s housing deficit which, by 2016 World Bank report, was estimated at 17 million units keeps expanding as supply falls far short of demand.

The country’s housing deficit, according to Roland Igbinoba, CEO, Pison Housing Company, is both quantitative and qualitative, explaining that besides the insufficient stock, some of the houses available are in sub-standard condition.

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This explains why, in the country’s urban centres, the number of slum dwellers is on the rise with the attendant over-crowding which exposes them to health risks such as diarrhoea, diabetes, hypertension, and other diseases. This also affects productivity in workplaces.

Because demand far-outstrips supply, house prices are high, pushing many to rented accommodation. In a report on the State of the Real Estate Market, Igbinoba noted that about 80 percent of Nigeria’s 200 million population lives in rented accommodation.

This huge number, according to the report, spends about 50 percent of their income on house rent. This means that other household needs such as feeding, children’s school fees and health suffer as a result.

In Nigerian big cities, house prices are such that only the rich can afford them. For instance, in Abuja, Lagos and Port Harcourt, average house prices according to a report compiled in February 2021 by Nigeria Property Centre (NPC), are N90,260,000, N88,790,000 and N47,530,000 respectively.

In the highbrow areas of these cities, Ikoyi in Lagos is leading with N389,940,000, followed by Maitama District in Abuja where the average price of most expensive houses is N367,420,000. The price is N223,360,000 in Asokoro District, also in Abuja.

As for rent in the these same cities, the average rents for the most expensive houses are N4,240,000 per year in Abuja, N4,120,000 per year in Lagos and N2,260,000 per year in Port Harcourt, Rivers State.

In the highbrow areas, it is N12,280,000 per year in Maitama District, N11,420,000 per year in Ikoyi, N7,720,000 per year in Wuse 2, N6,920,000 per year in Asokoro District, and N5,880,000 per year in Victoria Island (VI).

These contrast sharply with what obtains in other jurisdictions. In South Africa, for instance, 3-bedroom flat goes for 12-849R (about N333,100) per annum in the city centre. Outside the city centre, similar flat rents for 10.961R. For someone who wants to buy same size apartment in the city centre, the price is 18.024R per square metre while outside the city centre, it goes for 12.344R per square metre.

In Ghana, a 3-bedroom flat is rented for between GHS 3000 and GHS4,500. House price in Kumasi and Sekondi-Takoradi, a 3-bedroom apartment sells for $60,000 (about GHS252,000). But Cape Coast and Koforidua have relatively less expensive houses. An apartment here goes for $40,000 (about GHS 168,000).

In Nigeria, the government schemes are supposed to take care of these high prices and rents, ultimately reducing un-affordability and increasing access to housing by low-income earners.

NMRC, for instance, was set up as a private sector-driven company with the public purpose of bridging the funding cost of residential mortgages and promoting the availability and affordability of good housing to working Nigerians.

This, it is expected to do by providing mortgage lending banks, especially the primary mortgage banks (PMBs), with increased access to liquidity and longer terms funds in the mortgage market. Though the company has done well in many areas, its best is still considered not good enough for the sector.

The Family Homes Funds (FHFL) has a commitment to put 500,000 families in homes by 2024 and in the process, create 1,500,000 jobs. It prides itself as the largest housing fund in Sub-Saharan Africa that is out to create jobs, invest in social housing for Nigerians, and build sustainable communities.

But it remains to be seen the number of jobs it has created, how many Nigerians now own their own homes because of the fund and how many sustainable communities that have been built.