Despite the overwhelming gap in housing provision in Nigeria, the Federal Government’s 2,870 houses in different states are beyond the reach of low-income earners.
The houses were constructed by the President Muhammadu Buhari administration through the former minister, Babatunde Fashola, under the National Housing Programme (NHP). The government commenced 6,068 homes in 46 sites in 35 states, while 2,870 units were completed; others are at various stages of completion.
Among the NHP projects are 83 units of two and three-bedroom bungalows completed in Makurdi, Benue State, of which N712m was expended out of the N768m set aside for the project.
Others are 80 units of various house types and associated infrastructure in Yenagoa, where N342 million was spent out of the budgeted N2.28bn; while 86 units of two and three-bedroom bungalow house types and associated infrastructure in Cross Rivers State that N570.35m was released out of N830.12 million.
Also, in Anambra State, work is ongoing on the construction of 104 units of various house types with associated infrastructure and scheme, which received N246.74m out of N1.8bn.
It is the same story on NHP projects in Rigachikun, Kaduna State; Gama-Gwari, Fagge Kano State; Akinyele Area of Oyo State; Uyo, Akwa-Ibom, State; Minna, Niger State; Avu Town, Along Port Harcourt Road, Owerri, Imo State; Jalingo, Taraba State and every other state, where the project is ongoing.
Nigeria has been in a severe housing crisis, especially in the major cities, as the average house costs more than the minimum wage, vacancy rates are below five per cent and rental accommodation has dropped considerably.
The long-standing housing crisis has been worsened by reduction in new constructions, which prompted inflated property prices and soaring rents. The combination of a growing urban population, lack of an efficient mortgage system, poverty, increasing construction costs, high inflation and declining household income, have also made access to decent and affordable housing difficult for many Nigerians.
Rural-urban migration has also contributed to the shortfall of housing in urban centres. The unresolved tenure arrangements, access to infrastructure, deficiency of housing finance arrangements, encumbrances in the process of legal documents and inadequate government housing policies are also major issues affecting housing delivery.
Several efforts to address the housing situation by successive governments in Nigeria have yielded limited success over the years. Today, the nation is estimated to have a housing deficit of between 20 to 22 million homes that are missing from the national housing market, though the current demand is estimated to be above that figure.
Nigeria’s housing deficit would take at least a half of a century to fill even if the Federal Government’s current target to build one million homes a year is reached.
The implications of high housing deficit are that tenants in rented apartments pay as high as 60 per cent of their average disposable income, far higher than the 20-30 per cent, recommended by the United Nations.
Currently, the total current housing production is at about 60,000 units per year, which is grossly inadequate for a country of nearly 200 million people. It is estimated that it will cost $363 billion to curb the current housing deficit and the number is expected to keep growing, while a World Bank study projects that the cost of bridging this 20 million housing deficit is N59.5 trillion.
The housing sector has traditionally played a central role in the economy of nations and is the bedrock of the economy in more advanced economies like the United States of America, Great Britain and Canada, where the sector contributes between 30 per cent and 70 per cent of the Gross Domestic Product (GDP).
The sector’s GDP contribution rose to N8.9tn despite high-interest rates, inflation, and cost of building materials, among other challenges faced last year. The yearly growth rate of the real estate sector was 10.75 per cent in 2022 with a total contribution of 5.64 per cent, higher than the 5.60 per cent reported in 2021.
Specifically, one of the setbacks for the NHP scheme is the introduction of costly housing prices, which private developers said is not affordable and justifiable as it is beyond the low-income earners and may breed corruption among civil servants.
Under the scheme, buildings come with variation in prices as a result of the cost of building and topography. The units range from one, two to three-bedroom bungalows and blocks of flats across 34 states and the Federal Capital Territory.
For instance, the one-bedroom house type costs between N7,222,404 and N9,268,751; two-bedroom bungalow sells for N9,148,378 and N12, 398,460, while that of a three-bedroom range between N13, 241,074 and 16,491,155.
Currently, the mortgage system remains a treacherous path for prospective homeowners. There are concerns by contributors to the National Housing Fund (NHF) on the impact of the scheme in providing leeway for home ownership, especially for low-income earners.
The government has promoted mortgage support schemes to would-be beneficiaries, but unfortunately most of the NHF contributors could not afford the schemes.
President, Real Estate Developers Association of Nigeria (REDAN), Dr. Aliyu Wamakko, said most of the houses built by the past administration are unaffordable and in obscure locations. He wondered who will pay for the houses and how the ministry plans to recoup money spent on constructing the buildings. “The prices are high, nobody can afford it and the environment is not conducive for families,” he said.
According to him, if the government is serious about housing development, the private sector should be the best to drive it, while the government provides an enabling environment and loans with single digit interest rate.
Minister of Housing and Urban Development, Ahmed Dangiwa, noted that he is aware of the challenges that the latest version of the NHP faces in terms of selling houses that have been constructed and delivered.
“The prices are beyond the reach of the target market – low to medium income earners, and the locations are inaccessible. This situation has tied up significant government funds, and without swift action, these houses could begin to deteriorate.
“I will prioritise affordability in house design and delivery. In the case of this specific project, we will carefully study and review the factors that led to the current pricing and determine the best approach to make these houses accessible to Nigerians. The goal is to promote affordability, attract potential buyers and ultimately ensure that these housing units benefit Nigerians.”
AHCN wants commitment to policy formulation and enhancements that will attract investment into the sector, which should be driven with an attractive mortgage system with foreclosure that will create a vicious cycle, attract funding and recycle the same for easy recouping of invested funds into the sector.