Until issues surrounding mortgages are adequately tackled, Nigeria’s housing deficit of 17 million units would continue to rise.
According to housing experts, financing has remained a major bottleneck in the sector, as mortgages continue to account for low-single digit percentage of bank’s loan books.
The Federal Government needs to build one million housing units every year in the next 20years to meet the deficit, but with the low mortgage penetration in the country, this is not an easy task, as only 250,000 units are currently being delivered annually.
Chairman, HOB Estates Limited, Chief Segun Bamgbade and former President, International Real Estate Federation (FIABCI Nigeria), Chief Kola Akomolede, identified some of the major challenges facing the mortgage banking sector to include lack of foreclosure laws governing the default mortgage loans, high cost associated with the task of little transfer, poor infrastructure to provide support for house constructions and highly complicated and lengthy legislative and legal frameworks for land acquisition.
Also in the latest report of FBN Capital, analyst said that until the issues of mortgage is adequately tackled “housing deficit is set to remain substantial”
Entitled: “Down Tempo for Real Estate,” the FBN Capital analysts said that the persistent macro challenges have negatively affected the country’s real estate sector; resulting in a slow-down in activities.
Given the shocking inflation data released last February, they said that Monetary Policy Committee (MPC) has resumed tightening by hiking its monetary policy rate (MPR) by 100bps to 12.00 per cent, pointing out that banks would have passed most part of the increase to borrowers, who are real estate developers and mortgagors.
The experts added that foreign exchange (forex) sourcing challenges have put a strain on the real estate sector, as difficulties in securing imported building materials have led to higher costs in developing housing units.
They noted: “Based on a recent survey carried out by a domestic financial advisory institution, the number of properties up for lease in Lagos was more than double the number put up for sale in March.”
The latest national accounts from the National Bureau of Statistics (NBS) showed that in 2015, Gross Domestic Product (GDP) growth in the real estate sector slowed to 2.0 per cent year on year (Y/Y) from 5.1 per cent recorded in 2014.
For construction, the sector grew by 4.3 per cent y/y in 2015, compared with 13.0 per cent y/y the previous year, according to Statistics office.
At the National Economic Retreat held last March, President Buhari had reiterated his administration’s commitment to deliver one million housing units per year.
The minister of Power, Works and Housing, Babatunde Fashola, also disclosed recently that a new model designed to supply 17,760 flats across the country was underway.
Source: New Telegraph Newspaper