The bane of housing development in Nigeria is that its funding is largely dependent on household income. This was the summation of the presentation of the Lagos State Governor, Mr. Babatunde Fashola, at the commissioning of a privately built residential estate in Lagos recently.
Fashola, who was represented at the occasion by Commissioner for Housing, Mr. Dele Onabokun, asserted: “It is observed that a large percentage of residential housing stock in Lagos State is funded by household income. This contrasts sharply with what obtains elsewhere, especially in the advanced countries where the bulk of funding for housing development is from mortgage institutions,” he stated.
The Lagos Governor said one of the major challenges to housing development is how to close the deficit gap and provision of mortgage loan for homeowners, noting that there is a wide gap between demand and supply of housing products. “The situation with housing in Lagos is that there is a huge gap between demand and supply. It is what is generally referred to as a sellers’ market.”
He challenged private developers to consider establishing more housing projects in Lagos State, not only for profit motive but also to partner with the state government to reduce the huge housing deficit which, according to him, is partly due to the daily influx of people from all parts of Nigeria, leading to increased population.
Fashola invited Jubilee-Life Savings and Loans Limited, the promoters of the newly built King’s Court, a 50 blocks of flats, to enter into a partnership arrangement with the state government in the area of housing provision through its Public Private Partnership (PPP) arrangement. He assured that the State government would provide the land which stands as the government’s equity while the Primary Mortgage Institution (PMI) will build, as well as provide the finance. He promised that the government would provide an enabling environment which in turn would enhance housing delivery business in the state. This includes improvement in the security network and infrastructure provision and upgrade.
The governor said that the state was a huge market for real estate investment, saying such investment would thrive and help close the gap between demand for housing and the supply. He however, faulted the company‘s condition that subscribers should make an initial deposit of 50 percent of the N12m price tag for each of the flats, which he said was very high, urging a considerable downward review of the price.
He enumerated some of the steps taken by the Lagos State government to reduce the demand-supply gap in housing to include: construction of six new housing estates, strengthening its agencies saddled with housing provision, establishment of PPP strategy, mortgage registry, mortgage scheme and enactment of Lagos’ Mortgage and Property Law 2010 among others.
In his speech at the occasion, the Acting Managing Director of the Federal Mortgage Bank of Nigeria (FMBN), Mr Michael Nwogbo, said that the apex mortgage bank was out to create a housing revolution in the country.
Nwogbo, who was also represented at the event, said that a foreign funding strategy was already being worked out along with other measures to boost housing development.
These, according to him, include: increasing the acceptance and relevance of the National Housing Fund (NHF) to its contributors,; encouraging the formation of housing cooperatives to ease individuals’ access to mortgage facilities; creating mortgage products specially targeted at the undeserved, non-salaried informal sector which constitute about 85 percent of Nigerians and effectively linking the Nigerian housing market with local and eventually international capitals markets through the issuance of market-based financial instruments on a regular basis to provide cheap, long-terms funds for housing developments.