Amid the many advantages of homeownership, many Nigerians are still more disposed to renting homes. This is because, according to experts, Nigeria is one of the most difficult places to own homes.
In many economies, homeownership is seen as a symbol of financial stability and success but, in Nigeria, it is not entirely so because there are more challenges than the benefits of owning homes in the country.
Renting in the country is so popular among the people that a report conducted by the Pison Housing Company says that about 80 percent of the country’s 200 million population lives in rented accommodation, spending about 50 percent of their income on house rent.
“One of the main reasons for renting is the high cost of homeownership; many Nigerians cannot afford to purchase a home outright and must take out a mortgage to finance their purchase,” Udo Okonjo, CEO of Fine and Country, West Africa, told BusinessDay.
She added that mortgage is largely inaccessible because of high-interest rates in the country which makes it difficult for many to afford monthly mortgage payments.
Okonjo said home-buyers have limited options, adding that there is lack of affordable housing in the country, especially for low-income earners.
“The cost of housing in Nigeria is often too high for the average citizen and this leads to overcrowding and homelessness. This has created a situation where Nigerians have to build their houses themselves and usually have to move to the outskirts of the urban areas in order to find any land at all, much less land that’s affordable,” she said.
Tade Cash, CEO of Wealth Island Properties Africa, said in an interview that most Nigerians don’t buy homes because developers do their development with money borrowed from banks at very high interest rates and building materials prices, which are transferred to the end user.
According to him, developer don’t have products or other instruments through which they could get loans at low interest rates. “We have not benefitted from products such as Real Estate Investment Trust in Nigeria. There are many things that you cannot keep waiting for, and you have to find alternatives.”
“The important thing is to ascertain if it is a fair playing atmosphere. For us, we have no access to any of these funds except for private investor funding, which comes from those who believe in the vision and are ready to key into it,” he said.
He said that the mortgage structure in Nigeria was still evolving and one could rest assured that they are on-boarding a lot of properties onto the programme, more than at any other time in the history of the country.
Cash said: “With the growing population and the need to properly verify recipients, the issue of social trust, and innumerable complications and an identity management quagmire, we may not be able to say it is perfect yet.
“I am sure the government is also concerned and working to solve the problem. From the private sector, it will help us reach the mass housing market, especially with government backing; hence, we are building our systems in readiness.”
Okonjo, however, pointed out that homeownership has its advantages, which is why the government should empower the people to be able to own their own homes in order to enjoy those advantages.
According to her, besides savings, security is also another major advantage of owning a home. She said homeownership could serve as a form of forced savings. “Instead of paying rent to a landlord, homeowners are building equity in their own property. Over time, as the property appreciates in value, homeowners can sell it and make a profit.”
She added that homeownership provides a sense of security and stability, pointing out that homeowners do not have to worry about sudden rent increases or being forced to move if their landlord decides to sell the property. “Additionally, owning a home can give individuals a sense of pride and accomplishment, as it is a significant financial milestone,” she said.