That Nigeria is witnessing a gross housing shortage is no news. Not only is the average Nigerian aware of it, but it also stares us right in the face at every angle. However, what is new is that there have not been any drastic disciplinary measures to address it.
According to a publication by the Central Bank of Nigeria (CBN), Nigeria’s housing shortage as of 1991, was seven million and rose to 12 million in 2007; 14 million in 2010, 20 million in 2019, and another report by the Federal Mortgage Bank of Nigeria (FMBN), it is currently 28 million, that is as at January 2023. The interpretation is that 28 million people or more are homeless in Nigeria.
The CBN report went ahead to state that an estimated N21 trillion will be needed to finance this deficit. And that only 10 percent of people who need a home in Nigeria can afford it. The government alone cannot bear this burden, the private sector has to step in. But how?
At one time or the other, there have been some forms of pocket interventions as well as policies with no willpower for implementation in the housing sector, but all of those can only be compared to a drop in the ocean as none of them have been able to bring down the deficit. As long as the population increase is not proportionate to the housing provision, and the government is not doing anything to address the rural-urban migration, it is just natural that the deficit will continue to balloon.
In the face of the high deficit, there have been reports of empty, underused, or unoccupied buildings lying fallow for several years in places like Asokoro in Abuja, Lekki, Victoria Island, Ikoyi, etc in Lagos, and several other major cities. That is surely not a good report for a country experiencing a serious housing crunch.
The one reason a landlord or developer would build a house and leave it lying fallow for several years is that Nigeria operates a cash-and-carry economy. People hardly use the mortgage or other home finance instruments to finance their construction, hence having no burden of monthly debt servicing. And since the building is not attracting any mortgage interest, it can remain empty as long as the developer or landlord cares.
This has also made a lot of the landlords inflexible on the prices of buildings. Once they have their minds set on the amount to sell or rent those properties, it doesn’t matter whether nobody comes for them in the next 10 years. They would rather leave them lying fallow than shift their grounds.
It is also another reason why a developer will be able to muster the courage to construct an edifice that is not to the demand and expectations of the market.
Meanwhile, the private sector has been making a series of demands from the government on ease of doing business in the sector and on how best they can assist in reducing the deficit. Building luxurious apartments in highbrow areas that are not within the reach of at least mid-income earners is not in any way contributing to the housing stock.
Many are asking about the rationale behind having a housing glut in a particular area and a miserable deficit in another. How can you put so much pressure on the government for the provision of basic infrastructure as well as easing the land documentation processes and then turn around to say its private investment, they ask.
Some of these buildings are even reported to be owned by non-residents who fly in with their hard currencies and scare potential indigenous citizens. After building these houses, they will leave them empty and fly back to their bases abroad, when in fact, a lot of residents do not have a roof over their heads.
Faced with a similar situation, in 2018, the Australian government imposed a Victorian Government’s vacant residential land tax on any building or apartment that has remained vacant for an onward of six months.
This, according to the government, was to increase the availability of housing. The tax is charged annually and is calculated at one percent (1%) of the property’s improved value.
Early this year, the Canadian government followed suit. This time around, not only were taxes imposed on unoccupied buildings, a ban was placed on foreigners buying residential properties.
Once you are not resident in Canada, you wouldn’t have access to purchasing any residential apartment. This, the government said, is aimed at making more homes available to locals facing a housing crunch.
“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors. This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices.”
The Prime Minister, Justin Trudeau, concluded by stating that homes are meant for people, not investors.
The Nigerian government is herein advised to look in this direction. It is doable and possible. All it takes is discipline and the political will to implement.
Should the policy be adopted, it will force developers to build according to the principles of demand and supply. Echoing Trudeau’s words: Homes are meant for people, not investors.