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Affordable housing as the building block for sustainable home ownership

A mortgage consultant and Chief Executive Officer, Marvel Ventures Incorporated, Adenike Fasanya-Osilaja believes that affordability is the building block for sustainable home ownership as well as real estate markets. According to her, any government that fails to implement affordable housing scheme, must be building on a shaky foundation. She said, the nation’s 17 million housing deficit does not occur at the high-end of the property market, but the low-end, disclosing that Nigeria is far from practising affordable housing scheme. Explaining, she noted that it is not enough to say that Nigeria has a housing deficit of 17 million, describing it as generic, noting that experts should ascertain the sector of the market, where the deficit is coming from.

‘’We know it is not coming from the high-end of the market because we can see all these mansions around us, but from what I am seeing, the deficit is coming from the low-end of the property market’’, she stated. She however suggested that for the nation to get it right, it must go back to the past, look inwards and reassess the housing sector with the aiming of making housing affordable to the low-income earners in the country. She said anything short of this would not encourage the growth of the sector; hence the low-end has greater population, capable of growing the sector.

The opportunity for property development, according to her, lies at the low-end of the market, regretting that more commercial and residential property coming into the market has been designated for the high-end of the market. She also noted that home buyers must be educated in this regard, stressing that when home-buyers are properly trained prior to buying property, more than 70 percent of them would likely be successful in home ownership, just as the state and federal government would benefit from the business.

According to her words, ‘’It is not only enough to say, yes we want to build and whatever we build, the homeowner must buy. No, it should not be so; the home buyer should be driving the property transaction. They should ask questions on what they are buying. There is a difference between what you want and what you need. If you are a first time home buyer, you may not be looking for a mansion. We need to get this clear, so that we will not over-improving our property. She disclosed that when the property is too high, there is every tendency to put too much into it; which would in turn makes it unaffordable, explaining that family living in-face-me, I-face-you apartment would not be looking for a mansion, but something they can call their own. According to her, there is a huge gap, stressing that about 70 per cent of the market should represent middle to lower end and ‘’this is where, I honestly believe, the real opportunity lies in the affordable housing.

According to the United Nations, Nigeria’s population growth would double in the next few years, just as the rate of urbanisation has been forecasted at more than 5 per cent per annum, hence, this growing population must remain a driving force in the sector. For instance, the nation’s middle class is growing by 7.9 percent per annum and these are the people with purchasing power to pay for rent and purchase houses. Lagos state for example, is said to be growing at roughly 3.2 percent per annum, Abuja by 4.3 percent, and Kano grows at 3.3 percent per annum, implying more demands for houses would continue to rise.

Property development, according to experts, is arguably the most lucrative of all investment opportunities in Nigeria’s real sector. This is because most companies operating from residential homes due to unaffordable office spaces may be forced to move from homes to formal and serviced offices. Fasanya-Osilaja, who noted with disbelieve, that the general supply of property stock has been designated to the high-end of the market, instead of the lower-end, said this would have serious negative impacts on the nation’s property market. Experts had noted that despite the slowdown across the entire sectors of the nation’s economy, the property market has remained resilient. Over the past few years, the real estate market has grown on an average rate while the nation’s stock exchange index has also returned the same average over the same period. According to experts, the reason is that in the real estate market, the letting and sale prices are at times, dollarized, thus offering insulation against inflation. However, in order to see the success of the sector, the property sector has to overcome a number of decisive challenges, which have been the same for more than a decade. Some of the challenges include, land ownership and acquisition, which is often lengthy, cumbersome and really needs review as well as tightening to mitigate fraud. Also, there is challenge of poor infrastructure, as the costs has remained high and are still lacking in many parts of the country, where, if provided, would service growth. Others, according to experts, include inroads to provide affordable housing for middle-low end of the market, which is very enormous; hence the real estate sector requires some legislative changes or some sorts of government intervention, which is not unusual.

They maintained that if Nigeria is able to implement a sustainable real estate policy, which would offer healthy returns in the long term, there would be some improvements in the sector. Government as a matter of urgency should streamline land acquisition to shorten the length and lessen the fraudulent activities. ‘’We can also see that more financial institutions are providing some sort of vehicle to assist people to get onto the housing market, but the pace is still quite slow, “she noted while advocating for strengthening of the existing mortgage institutions, instead of establishing new ones to be able to play more effective roles in the sector. ‘’Government should strengthen what we have and ensure proper regulatory system. If we over-regulate the market, it will make it unwieldy. It is more efficient to go back and look at what we have and make corrections than putting other policies and this is what actually, is causing the inconsistency in the system’’, she added. On a sustainable level, government, according to her, should make the interest rates low and also try to formalise the informal sector, which accounts for close to 80 per cent of the labour force, so that on an affordable space, the country can get more people into the housing sector. Investment expert, John Odeh, however urged the public and private sector to make housing affordable to the middle and lower rung of the market, instead of leaving it wholly in the hands of those investors, who are always hoping for a return on investments. According to him, the high-end buyers are no longer interested in buying property due to the prevailing economic uncertainties, caused by stiff monetary policy of this present administration, a situation which he said, has pushed the nation’s real estate market into serious lull. “While some investors are not buying properties, the savvy ones are scouting for distressed properties to buy with the intention to re-furbish and resell at a later date while many Nigerians are homeless, as they cannot afford the properties going from the asking price of between N15 to N20 million, depending on the finishing as well as location. Some estate developers and industry analysts, who spoke with National Mirror, said both high and low end markets are no longer encouraging, as ultimate buyer are not even showing up to inspect property. Experts have traced the lull to banks exercising caution on the market at a time when first-time buyers and real-estate speculators are anxious to tap both cheap prices and low-interest mortgages.

High cost has spurred glut in properties stuck in some areas, as people affected by this, are mostly the middle class. Analysts believe that since Nigeria is densely inhabited, residential property has been a priority. As much as 70 of the property market in the country is residential. But this has meant that little investment Amaechi has gone to retail and offices. Even so, the country still has a housing crisis, meaning that affordable housing projects are needed. Nigeria’s commercial real estate market needs to partner with neighbouring markets as the country is encircled by Ghana, Cameroun, Togo and the Benin Republic among others. The nation’s commercial property market is the strongest in Africa. African Property News had reported that Nigeria stands out as having one of the strongest real estate markets in the continent. Nigeria’s commercial property market needs to develop high quality offices, which would attract new investors to the country. One global company that operates in the country is Shoprite, spreading its tentacle across Africa and other parts of the Central Africa by using Nigeria as a spring board. Shoprite has been a major partner, especially in the country, where it is building a number of shopping malls. It owns Delta Mall in Africa’s largest economy and also building another four malls. Various South African companies, including small and medium enterprises may soon invest in the country. They have done extensive research into the country and its markets The World Bank Doing Business Report for 2015 ranked Nigeria high, despite the insurgency in the country.

Nigeria’s commercial real estate market therefore needs the economy of the country to improve, thereby staving-off effects of the weak currency, which Nigerian government is trying to control. Meago Asset Managers, Jay Padayatchi said Africa remains a long term player, saying outside funds or private equity groups would attempt to develop in parts of Africa

Source: National Mirror

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