• Monday, June 17, 2024
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Increased supply, contribution to GDP top FG’s new housing agenda

A housing unit

From an estimated 500,000 units, the federal government will be increasing the annual housing supply to 1,000,000 units, according to its new housing agenda which experts say is overly ambitious.

The plan will also increase the housing sector contribution to the gross domestic product (GDP) from the current 5.7 per cent to 8.83 per cent which is to be made possible by improving linkages between housing and the real estate sectors.

FG’s recent five-year National Development Plan (NDP) which embodies these projections adds that there will be a decrease in urbanisation rate from 52 per cent to 40 per cent and a reduction in rural-urban migration from 6.5 per cent to 5.0 per cent.

Overall, the plan aims to improve access to affordable housing which, today, is neither here nor there in terms of delivery and available stock viz-a-vis demand.

To achieve this, government plans major shifts in land administration and acquisition, the method and the materials for delivery, all aimed to ease and increase the number to be delivered and ease access.

According to Andrew Mervin, Chief Economist at PwC, Nigeria has one of the most rigid land tenure system, adding that this, coupled with a faulty property ownership system, works against economic growth.

This, perhaps, explains why the new plan aims to develop an effective land management system to provide transparency and ease the administrative burden of the land administration process.

Expectation is that this comprehensive system will include policies and implement legislation that will reform land administration, title acquisition, registration, and transferability to establish clear property rights and ownership.

A data-driven system is to be introduced to map and digitalise land registries to improve accountability and transparency across the sector. Moreover, the government will incentivise housing start-up development through innovation hubs and accelerator programmes.

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Building method in Nigeria which does not support mass production of housing has always been fingered for the wide gap between supply and demand that has created a deficit estimated at 20 million units.

The current plan, therefore, aims to develop local content and know-how for building construction and technology and materials sub-sector. Government will therefore promote and increase the use of local building materials to achieve a target of 75 per cent of building components through the creation of an investment climate that engenders building manufacturing investment.

It will also promote and increase the use of alternative building materials and new technologies in housing delivery through incisive research and development and execution of pilot projects in each state of the federation and the FCT.

The plan will apply building materials focused research and development by way of pilot housing schemes built majorly from alternative locally produced materials and new technology while government is to incentivise and adopt low-cost housing construction technologies and innovative affordable housing delivery methods.

It is expected that this new approach will ensure an increase of the government’s social housing budget for highly vulnerable persons, including people living with disabilities (PLWDs), low-income earners, among others, with a target of at least 10 percent reduction in housing deficit within the next five years.

It is expected further that this plan will help to phase out slums, substandard housing, and provide comfortable shelter for the homeless through social and affordable housing that meets international standard and aligns with the SDG of creating sustainable cities and communities.

Though the minister of works and housing, Babatunde Fashola, does not believe Nigeria has a housing deficit, government in the new plan intends to bridge the gap between housing demand and supply constraints; create rental housing opportunities for at least 500,000 citizens, and reduce the demand for multiple years’ rent payment.

It also intends to bring unused and empty houses into use, especially in urban areas; make housing payment affordable by matching it with income receipts; deliver site and service schemes that will provide, at least, 50,000 plots of land in each state of the federation including the FCT for housing development.

Government also plans to develop and implement a national urban development policy that focuses on urban renewal, provision of low/medium income housing, while checking rural to urban migration.

It is hoped that this action plan will reduce the percentage of the urban residents who live in slums from 69 per cent to 55.2 per cent to make cities and human settlements inclusive, safe, resilient and sustainable.

The mortgage system in Nigeria has remained a fledgling for many years. The new plan is to facilitate real estate specific capital formation and funding mechanisms for growing the mortgage finance sector.

Working in partnership with the private sector, government plans to create a market that has multiple long-term funding sources, including full integration with the Nigerian capital market where the value of listed mortgage-backed securities would be at least 20 per cent of the market capitalization.

The plan will also establish a robust mortgage market that provides access to housing finance to a minimum of 20 per cent of Nigerians in all social classes in urban centres for the purpose of owning their own houses; integrate housing financial products into the Nigerian capital market to facilitate access to homeownership for millions of Nigerians and build up demand for housing.