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Why Nigeria lacks affordable homes, by experts

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Why Nigeria lacks affordable homes, by experts

 

Except government increases the national minimum wage, many Nigerians may not be able to have access to decent housing units due to their low income level, New Telegraph has learnt.
One of the affordable housing advocates, Mr. Kunle Faleti, disclosed this in his new report titled: “Wanted: A Home For Every Nigerian, But Housing Affordability Remains Elusive.”
Specifically, he said to buy a new apartment of a standard size of 70 square meters, Nigerians would have to save their entire annual salaries for 15 years, “arguably the longest period compared with some of African neighbours.”
Currently, the national minimum wage in Nigeria is N18,000.
Faleti pointed out that despite reports of steadily increasing personal income, saving up to buy a home has remained a major challenge for most Nigerians.
He said: “Low housing affordability is linked primarily to income level, which is significantly lower in Nigeria than in most parts of the continent. An increase of wages will equal the inflation rate and real estate prices show a similar upward dynamic, meaning that housing doesn’t become more affordable.”
Besides, he pointed out that in terms of mortgage loans as a percentage of Gross Domestic of Product (GDP), Nigeria was grossly lagging behind countries such as Cape Verde, South Africa, Namibia, Mauritius, Botswana, Rwanda, Kenya, Seychelles, Zimbabwe, Zambia, Malawi, Burundi and Mozambique.
“It is, however, ahead of Senegal, Uganda, Ghana and Tanzania,” he said.
With the way things are going, he argued that lower housing prices in Nigeria would make projects economically unviable for developers, who have to bear high construction costs.
“In addition, the high expenses are attributed to the ‘complicated and non-transparent scheme of getting construction permits’ and preparation for construction works like laying utility lines, among others,” Faleti said.
He said states, cities and metro areas across the country faced an unprecedented economic, fiscal and environmental challenges, which have made it imperative for the public and private sectors to re-think the way they do business, saying, “if there is the will, there will be a way.”
It has been argued that apart from being one of the items that absorb a large portion of household expenses, housing played a special role in the social, political and economic discourse of most societies. As a matter of fact, housing has been known to be a major component of creating stable and healthy communities.
According to other experts, key issues affecting affordable housing in Nigeria included property registration and title documentation’s uncertainties, obsolete Land Use Act, paucity of long term fund and high cost of building materials among others.
Experts at Proshare, in a report, stated that for a country to meet its affordable housing expectations there must be a stable macro-economic environment, noting that the situation has not been helped by high inflation rates and nominal interest rates in Nigeria.
The analysts said: “Not only does a volatile economy like Nigeria reduce affordability of mortgages but also affects the supply of funds and the types of mortgages offered by lenders. In a volatile economic environment, lenders are more concerned about liquidity risk and are reluctant to offer long term loans.”
Besides, the analysts said that the volatility of the Nigerian economy has affected the supply of funds available to house developers, which has in turn inhibited growth of the housing sector.
“Lenders, more often than not, are concerned about liquidity risk and are reluctant to offer long term loans,” they said.

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