Forward steps with affordable housing
Today we turn our attention to Nigeria’s housing market. The housing deficit is currently estimated at 17 million housing units, with Lagos and Abuja accounting for 15% and 10% respectively of the total deficit. In both states, several completed residential buildings remain vacant as affordable housing is not readily available. This has worsened following the squeeze in consumers’ purchasing power on the back of the country’s macro challenges.
Historically, mortgage financing has been expensive in Nigeria. Based on industry sources, the ratio of mortgage loans to total GDP remains extremely low at 0.5% compared with 80% in the UK and 31% in South Africa.
Last month the FGN signed a mortgage refinancing agreement worth N13bn with the Federal Government Staff Housing Loan Board (FGSHLB) and the Nigeria Mortgage Refinancing Company. We understand that there are already 30,000 registered qualified off-takers.
Through the national housing scheme 1,500 additional housing units have been developed across seven states in the country, namely Taraba, Kwara, Enugu, Ebonyi, Imo, Nassarawa and Niger.
The Lagos State government through its rent-to-own scheme has provided 500 additional housing units over the past three months. Furthermore, Lagos has entered into public private partnerships to increase the affordable housing stock within the state.
GDP and real estate sector growth (% chg; y/y)
Sources: National Bureau of Statistics (NBS); FBNQuest Research
The weakening of the naira over the last few years has presented Nigerians in the Diaspora with opportunities to invest in the country’s property market.
Last year, real estate contributed 7% to total GDP and contracted by -6.9% y/y. We hope to see increased activity across the property market (both demand and supply sides) as the economy slowly recovers and moves back into growth.