Owning homes of their own has become a pipe dream for 68 percent of Nigerian workers engaged in the public and private sectors because their wages are inadequate to enable them to build through a mortgage.
The workers are thus stuck in rented apartments and must suffer the anxiety that often attends the landlords’ seasonal visits, phone calls or mail seeking to collect the rent.
A recent survey on housing for the middle class, carried out by the African Development Bank (ADB) classified people in the mid-income class as those within the income bracket of N75, 000 to N250, 000 or N300, 000. And about 92 percent of this group, the survey adds, are literate, with certificates ranging from Bachelors to Masters degrees and above.
“The income level of this group is not the only risk the mortgage institutions will be looking at, because they will also be demanding collateral and monthly contribution for loan repayment, which the income level of most people here cannot support,” Femi Akintunde, AM Facilities CEO, explained to BusinessDay.
The middle class population in Nigeria, which the ADB estimates at 40 million, representing about 23 percent of the entire population, has been increasing in recent time and Akintunde explained further that this was because some people were dropping from the upper class while a lot more were rising from the lower class to join the middle class population.
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Demand for housing from this class which maintains a family size of four, remains strong and for those of them who can afford mortgage by virtue of their salaries, the cost of mortgage at 22-24 percent interest rate, exclusive of other charges, is scary, hence they resort to renting rather than buying.
This corroborates analysts’ view that the reason opportunities in housing continue to remain untapped is because the structures needed to do that are not in place, stressing that demand remains strong, because people want housing which is largely unaffordable.
“What would have made housing affordable is a mortgage instrument. Up till now, the country does not have up to 50,000 mortgages for the entire population of about 170 million people. This is not healthy for any country that wants to grow its residential housing sector, says Obi Nwogugu, Head, African Capital Alliance Property Investment Company.
Nwogugu explained that, “housing in other jurisdictions is an important part of the economy and drives the GDP up to 10-15 percent if the country gets its mortgage model right.
“The model refers to creating a path to be able to buy a house. If you create this path which comes in form of a long term lending instrument, you will find that there will be demand leading to a pool which will expand exponentially,” he added.
The ADB also classifies people in the lower class of society as those whose income is below N75,000 per month and these, according to Jide Anifowose, an estate developer, are those looking to build housing below N1 million.
“These people go to the suburbs where they put something together to live in. We say demand is high there, because there are a lot of Nigerians in that income level, but they are mostly in rural areas.
“Those of them in the city are not bankable. Their risk level is too high for the private sector to cater for their needs. So, the only party that can take care of their needs is the government,” he said.
Anifowose who develops housing for people in the upper middle class says he has no apology for not building for low income earners, explaining, “I am not government, nor am I a philanthropist. If I must build low cost housing, I must get land free; again if I apply for approval, it must be given to me free of charge, and as soon as I apply, I must be given.”
Akintunde recommends that Nigeria ought to consider looking at the development of social housing, which is non-existent at the moment. He observes that demand at the lower class level would remain high unless government intervenes, as such demand is not attractive to private developers.
CHUKA UROKO
