Stakeholders in property development sector are not impressed with the performance of President Muhammadu Buhari’s administration in the last two years.
As the current administration under President Muhammadu Buhari marks two years in office, Nigerians have been putting heads together to fathom the level of achievement in different sectors of the economy including real estate.
It is a common knowledge that shortly after Buhari was inaugurated in 2015, the country’s economy began its descent into recession occasioned by fall in crude oil price, foreign exchanges challenges and lot more.
Despite these, some remarkable steps have been taken in the housing sector even though they are yet to yield the anticipated result. It is on record that as soon as the administration came on board, the Minister of Works, Power and Housing, Mr. Babatunde Fashola, rolled out a National Housing Programme (NHP) with different house designs for the six geo-political zones in the country.
He said the national housing programme is expected to bridge the huge housing gap of 17 million in the country, create thousands of jobs as well as ensure sustainable and affordable homes for beneficiaries. Already, preparation for the scheme had been carried out in some of the states while proper construction, according to the ministry’s source, has commenced The NHP, according to Fashola, is expected to gulp about N41 billion from the N64.9 billion budgeted for capital spending in the housing sector in 2017 budget.
Stakeholders in the sector who spoke with New Telegraph, believe that apart from the roadmap presented by the Federal Government, there is no activity so far that has really taken place as far as housing delivery and mortgage provision are concerned within the period under review.
They expressed worries that two years after the promise to recapitalise the Federal Mortgage Bank of Nigerian (FMBN) to the tune of N500 billion, nothing has been done and this has limited the operation of the apex mortgage institution in the country.
In the same vein, there was also no much mortgage activity in the first quarter of the year as the major transaction was N13bn NMRC Refinancing for civil servants.
The domestic mortgage industry is currently underdeveloped and credit is expensive, with interest rates averaging around 30 per cent, according to a recent report published by the African Development Bank. Most estimates suggest that only around 20 per cent of the population participates in the formal banking sector, with the remaining 80 per cent dealing almost entirely in cash.
Taking a critical look at the housing sector, Chairman, H.O.B. Housing Estate, Chief Olusegun Bamgbade, pointed out that government seemed to have a good roadmap for housing and infrastructure delivery, judging from the budget. According to him, if within the next two years Nigerians are yet to see any spectacular progress in housing and infrastructure provisions, they can come out to condemn the authorities for nonperformance.
Festus Adebayo, leading promoter of housing development in Nigeria has called on the government to provide intervention fund as was done in Agriculture to Housing. He solicited for coordination of NMRC, FMBN, FHF and Mortgage Banks by Central Bank of Nigeria.
For two years now, the clamp down on corruption and money laundering have reduced invested funds in real estate. Residential and commercial building market recorded sluggish growth due to the anti-graft crusade. Many houses belonging to former public office holders under probe were sealed in Lagos and Abuja by officials of Economic and Financial Crimes Commission (EFCC).
This alone created panic in the housing market as prospective buyers withdrew patronage. Managing Director of Financial Derivative Company, Mr Bismarck Rewane, noted that Eko Atlantic City and major on-going commercial/office projects such as shopping centres, struggled to gain attraction as domestic and international investors adopted a wait-and-see approach to the projects.
Lagos-based estate surveyor and valuer, Chief Kola Akomolede, said that the lull in property market would continue due to low disposable income of honest people.
Consequently, demand for new homes has dropped, while dormant properties still litter highbrow locations of Ikoyi, Lekki, Victoria Island extension and some government quarters in Lagos metropolis. Same situation persists in Abuja’s Maitama and Asokoro and Port Harcourt in Rivers State.
Due to the tough economy and inability to pay high rents, many tenants moved from prime areas to more affordable locations on Lagos mainland, while others moved to border communities. According to findings, vacancy rates of property remained high.
Within the period, the Federal Government, through FMBN, the Pan African Finance Institution, Shelter Afrique and Real Estate Development Association of Nigeria (REDAN), also signed a $2 billion Memorandum of Understanding (MoU) to build 20,000 houses annually in the next 10 years. This, Fashola said, represented a strategic partnership that should deliver housing through mortgages at low interest rates.
In the last two years, developers, engineers, road contractors and home builders have not been finding it easy over the rising cost of building materials. They warned that with the current rise in price, it might be difficult to build affordable houses for Nigerians in need of accommodation.
Current market survey shows that prices of steel bars, popularly known as iron rods, have remained high at N245,000 per ton from N165,000 in 2016, representing an increase of N80,000. Also, prices of paints (20 litres) increased from N8,500.00 to N9,500.00 in one year.
A bag of cement costs N2,500.00 from N2,200.00. Prices of plywood, steel security door and switch rose from N2,500.00 to N4,000; N192,000.00 to N195,000.00; and N1,200.00 to N1,500.000 respectively. Lagos based surveyor, Mr. Stephen Jagun, described the current situation in the sector “as a shock to every player.”
To revamp the housing sector, the Federal Government needs to show seriousness about its National Housing Programmes before the end of this year, recapitalize FMBN to the tune of N500 billion for a virile mortgage sector and work more on Ease of Doing Business policy to attract private sector for housing.