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Assessing Buhari’s one million yearly housing units’ feasibility

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Published in Real Estate
Tuesday, 03 November 2015 09:12

Concerned about the report of the United Nations Development Programme, UNDP, which puts Nigeria’s housing deficit at 17 million, President Muhammadu Buhari during his electioneering campaign promised to build one million new housing units annually. However, industry stakeholders see the target set by the President as a tall order which may not be feasible unless huge fiscal sacrifices are made to fund the capital-intensive sector. SYLVA EMEKA-OKEREKE reports

Experts in the housing sector have argued that it will take Nigeria several years of long planning to actually close the yawning housing gaps.

This is as they noted that if the Federal Government really wants to build the one million housing units yearly as promised, houses, it clearly cannot achieve it in the next ten years, as Nigeria may not have enough building experts to realize the promise.

Beyond the housing units, the President also promised to create 720,000 jobs in one year with 20,000 jobs per state yearly for people with basic education. Experts also said, the Federal Government may not have adequate clear plans to accomplish these ambitious goals.

John Adeyemi, a property expert said, several months had gone in the present administration, without a clear roadmap to meet the target. ‘’If you want to build one housing units within a year, you don’t wait half the time before you come up with a programme.

It is very clear that the government has no serious intention to pursue this housing programmes that will produce one million housing units a year’, Adeyemi stated. ‘’Just imagine one million new housing units in this country.

It will take years just for first level planning and then take more years to actually build the houses. That is, if the government really wants to build the houses and if it does, the government clearly cannot achieve it in four years. You don’t have to be a building expert to see that this promise is unrealistic’’, he stated.

He therefore advised the Federal Government to stop proposing fantastic ideas that will never going to get off the ground, saying this is not what the Nigerian people really want.

According to him, what the people really want is a visible improvement in the housing sector as well as other sectors of the nation’s economy.

It would be recalled that the United Nations Development Programme, UNDP, had revealed that Nigeria has about 17 million housing deficits, heightening speculations that the country needs over 5,000 housing units annually in the next 12 years to fill the yawning gap.

“We are ready to reform the housing sector. We don’t have housing units and the few ones we have are in the hands of few individuals at the top of the echelon in the society.

So, we are looking at what government can do in the aspect of the reform, so that private sectors can be empowered as in other countries of the world to provide the housing units”, he stated.

As it is, it is likely that the prices of houses will continue to rise, but at a slower pace than we have seen in the outgoing year, with most experts predicting less than 5%, though, there might be considerable variations in some states, depending on land mass as well as locations.

The United Nations Development Programme (UNDP) had recently revealed that Nigeria has about 17 million housing deficits, heightening speculations that the country needs over 5,000 housing units annually in the next 12 years to fill the yawning gap.

It would be recalled that the housing deficit rose from 7 million in 1991 to 12-15 million in 2008 and 17-18 million in 2012 and unless the federal government is able to deliver on its promise to provide one million new housing units yearly, the situation will get worse.

UNDP had during the report urged Nigerian government to adopt a multi-pronged approach to redress the housing shortages, listing those methods to include involvement of central, regional and local governments in housing projects.

This collaboration, according to the global agency would involve private sector, nongovernmental agencies, community associations as well as developing a viable mortgage finance sector to assist the private sector.

Already, the World Bank had warned that the rising population could hit more than 200 million by the year 2050, which would increase rural and urban drifts as well as the rising building costs, exerting serious pressure for shelter.

Federal Ministry of Housing had earlier disclosed that since the establishment of the Federal Housing Authority, FHA, in 1973, it has been able to deliver only 35,309 housing units nationwide with Lagos metropolis having the highest number of the units.

Investigation has shown that the number of housing units in Lagos metropolis rose from 393,000 in 1970s to 700,000 in 1992 and grew further to 1.25 million units in 2012.

It would be noted that since the second phase of the national policy on housing was announced in 1972, under which about 5 million housing units were said to be delivered by the three tiers of government, less than 200,000 have actually been delivered till date.

With the growing population of over 160 million, experts said, Nigeria needs more than 17 million new housing units to withstand the test of time with an estimated costs of over N50 trillion to reverse the trends.

Currently, over 80 per cent of Nigerian adults are said to be living in rented apartments, compared to 19 percent in South Africa and 22 percent in Ghana. Already, there is an urgent need for guest houses in urban area and it has been growing on daily basis.

In some Nigerian cities, residential accommodations have disappeared while commercial properties like eateries, banks and telecom offices have taken over the apartments.

Also, some of these cities have developed reputations for excessive night life services like clubs and shopping malls, thus making the prices of the property in those areas, to go up as the demands are hitting the rooftop. Just as some stakeholders are seeing the incoming 2015 as a year of contrasting halves, they however noted that there might be actually a huge rise in property prices.

They also noted that 2015 will be a year of rapid development of properties, especially estates and blocks of apartments.

Plots of land would be bought at the fastest rate, if the Land Use Act is being reviewed by the federal government to give developers easy and comfortable access to develop more housing units in the country.

There is also greater need for security and infrastructure to spur more demands for serviced estates and apartments, where people will feel safe with access to water and light.

They therefore advocated for the housing models of some countries like Singapore, South Africa and United States of America, where private operators were encouraged to build more housing units, using modular technology to achieve it.

To give flip to these models, there will be need to recapitalize the nation’s mortgage banks, which is not only necessary, but very urgent to attract capital funding to support the real estate development.

Overall more homes need to be built to meet demands and in 2015, there would be tremendous steps to access loans by developers and the deals offered could be the key to more successful housing units in the coming year and beyond.

Experts have said, that until the monetary authorities bring down the interest rates to single digits to enable low income earners to obtain affordable mortgage financing, the nation’s mortgage industry will remain at its present dismal level, contributing below one per cent to gross domestic product, compared to 24.7 per cent in Malaysia, 29 per cent in South Africa, and 85 percent in New Zealand, according to the Central Bank of Nigeria, which has laid out plans for a N200 billion intervention fund.

Federal governments should as a matter of urgency, invest massively in basic infrastructure like roads, electricity and water, whose inadequacy has increased the cost of building.

The state governments should as well, engage private sector to target millions of new housing aimed at developing well-planned new towns. Collaborative efforts between the government, research institutes and private developers are necessary to promote alternative building materials as against the expensive cement-based block style that often accounts for over 40 percent of the total costs.

Government should revive its reforms of the mortgage sector to reverse a situation, where over 70 per cent of all housing projects is undertaken by private individuals and informal sector, where mortgage loans account for only 0.5 per cent of all lending, compared to 30-40 per cent in other emerging economies and 60-80 per cent in developed economies.

There is no doubt that Nigeria should adopt similar models like the South Africa’s Reconstruction and Development Plan, which delivered 2.3 million housing units in the last 13 years.

Also, China’s Affordable Housing Policy delivered 12 million units in five years and similar programmes in Canada, Kenya, Sweden, France and Tanzania, where tax holidays, cooperatives, savings and loans strategies are utilised to make housing available to low and medium income earners.

Nigerian government should also encourage Lagos state government to revive its mass housing scheme, initiated by the former governor, Alhaji Lateef Jakande to increase housing units, rather than spending billions to reclaim land and buildings meant largely for the rich while leaving the tax-paying poor masses to their faith. NEWS 80% Nigerian adults, 19% Ghanaians live in rented apartments-Investigation

A recent investigation has shown that over 80 per cent of Nigerian adults are said to be living in rented apartments, compared to 19 percent in South Africa and 22 percent in Ghana.

Prior to now, the World Bank had warned that the rising population could reach 289 million by 2050, thereby increasing rural and urban drift as well as rising building costs, exerting pressure on shelter. UNDP had noted that many Nigerians live in slum areas, warning that the number might increase over time.

According to the investigation, the housing deficit rose from 7 million in 1991 to 12-15 million in 2008 and 17-18 million in 2012, noting that unless the federal government is able to deliver on its recent promise to provide one million new housing units yearly, the situation will get worse.

 

 

Source: National Mirror

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