What is “affordable” when it comes to housing? Who determines the price point, and more importantly, what is the process for conveying ongoing market information to the public in a cogent and timely manner? The sustainability of the market is one hundred percent dependent on finding solutions to these questions (problems) asap.
As usual, I was having a conversation with a colleague in the Nigerian housing finance industry, and of course we ended up trying to figure out why the mortgage industry still seems almost invisible in the market.
The people, who should actually be the primary customers of the mortgage companies are almost oblivious to their existence, or are scared to death of taking out a mortgage loan. The funny thing is that these same people think nothing of taking a personal loan or a car loan.
As I have said before, banks are actually giving personal loans to customers, knowing the customers plan to build properties with the funds received. A first time homebuyer, Ike Ejekam was so terrified of getting a loan, that he raised his money from unconventional sources like family and friends. As he put it ““I don’t like to think about mortgages because it scares me when I see how difficult it is for my friends to get a loan.”
(Analysis: Nigeria’s property boom: only for the brave, by Joe Bruck. Read more at Reutershttp://www.reuters. com/article/2013/09/15/us-nigeria- property-analysisidUSBRE9 8E03620130915#phZVie5VHKcD eK4y.99).
This is the overwhelming response from the public when asked if they would countenance a mortgage for their home purchase.
They don’t understand the product, but they know their friend (or brother, or sister or somebody else) applied for a loan and was rejected.
The funny thing is, this gentleman actually worked in the banking industry. I thought that was a sad reflection on the industry.
It is imperative that the housing industry address this problem with all urgency. It is a huge sign of impending disaster when the general public sees the mortgage industry as “for the elite” because, as with every other national program, it is very much a numbers game. The more widespread the product is, and the larger the number of people that partake in it, the more standardized it becomes, and with that, the lower it becomes in price.
Are there national home buyer awareness shows on television? What is the vehicle for conveying ongoing information to the general public in a language they can understand?
If a banker admits to being too scared of a mortgage to apply for one, what is the hope for a driver or a clerk? So what does the mortgage industry have to do with affordable housing? A recent statistic on green housing in the US might present some clarity.
“According to McGraw-Hill Construction’s report, “World Green Building Trends—Business Benefits Driving New and Retrofit Market Opportunities in over 60 Countries,” client demand (35 percent) and market demand (33 percent) were the top two reasons the global green building market grew to $260 billion in 2013, including an estimated 20 percent of all new U.S. commercial real estate projects.” (Byron Carlock, writing for National Real Estate Investor at http://nreionline. com/finance-investment/ sustainability-new-norm-realestate development and investing).
Forget the “green” part for a minute even though that is a very important component for the future of the housing industry, and just look at the statistics. It is an amazing recognition that client demand plus marketing demand make up 68% of ANY market, whether real estate, insurance or whatever you may have.
This is a clear indication of the need for any consumer related industry to build its program on the needs of their market rather than on their own conception of what their market might want.
In essence, the Nigerian market needs to move from being a TRANSACTION oriented industry to being a CUSTOMER or market) oriented one if the goal of a sustainable real estate market is ever to be achieved.
One of the clear indicators in the Nigerian affordable housing market, in my humble opinion, seems to be that the houses are not as functional for the first time buyers as they should be.
Let me be clear, a civil servant who makes 750,000.00 naira per year cannot afford a 10 million naira “affordable” house, so the question is, why build it? And when a condominium style apartment is sold in Lekki for 60 million naira and listed under “affordable housing”, how are we supposed to take the seller seriously? Please don’t get me wrong, there is a market for a 60 million naira condominium apartment and we are very happy for anyone that is able to purchase one of them.
We just advise that it should be labelled what it really is…Unaffordable Affordable Housing. As usual all comments and critiques are welcome on this article, and I wish you a very prosperous week.
Source: National Mirror