Nigeria’s Housing Sector In 2011

The housing and property sector, like any other sector of the economy witnessed some challenges, as well as made a level of progress in the year 2011.  The sector offers one of the basic necessities of life (shelter) that every human being desires to have, but it is very unfortunate that the processes that are involved in housing and property development and home ownership are very costly, and which of course have accounted for its rare affordability.

Activities in the year began with various groups and professional bodies making inputs on how to tackle the numerous challenges of the sector, ranging from building collapse to Land Use Act, and means of encouraging Mortgage Institutions to operate with tax exemption.

When the Nigerian Institute of Structural Engineers (NISE) within the period engaged themselves, seeking for preventive measures to structural failures, which effect had been disastrous, and with their resolve to play their roles as professionals in seeking for how to prevent building collapse, the Association of Professional Bodies of Nigeria (APBN) on their part tried to ensure effective and efficient housing delivery and orderly urban development in Nigeria urged government to exempt Primary Mortgage Institutions (PMIs) in the payment of taxes.

One major thing that shook the housing sector in 2011 was the high cost of cement, which is one of the basic raw materials used for construction.

Right from the beginning of year 2011, the price of 50kg bag of cement rose from N1,500 to about N1,900 in January, and continuously rose to between N2,400 and N2,600 per bag in April, 2011 which trend made it difficult for developers and intending home owners to properly carry-on their project execution.

The situation then was almost getting out of hand, as the masses lamented over the high cost of cement, as no proper reason could be given for the skyrocketing price before the federal government’s intervention through the economic team.

As a matter of fact, the constituted Nigeria’s Economic Management Team came on board when cement price had risen to about N3,000 per bag in Lagos area, and was so alarming that construction chiefs called on the economic team to take the issue of production and distribution seriously.

The concern of the economic team then was to tackle the fluctuations in cement prices, as they were mandated to crash the prices so as to make the product available and affordable, thereby boosting the construction industry.

Reacting to the development, the President of the Nigerian Institute of Estate Surveyors and Valuers (NIESV), Mr Bode Adedeji, while urging the economic  team to rise to the challenge of tackling the skyrocketing cement prices, said that the rise in cement prices would further worsen the spate of unemployment.

“The escalating price of cement will compound the myriads of challenges facing the housing and construction sector of the economy.  Further crises in the sector will compound the youths unemployment problem, and the newly constituted Economic Team of Goodluck Jonathan must accord this issue a priority”, he said.

Although the Economic Team impacted on the prices of cement at the first instance, as the price of cement was reduced to pave way for meaningful development in the building sector, but the effort was not sustained, as prices began to change marginally.

Inspite of the various challenges in the year across the country, and these achievements are noticeable in both.

Within the first quarter of 2011, the Federal Mortgage Bank of Nigeria (FMBN) approved the sum of N17.6  billion loan for estate development in the Federal Capital Territory (FCT).

The loan was approved for 32 estate developers to build 6,214 housing units in the FCT, and this amount constituted 25 per cent of the bank’s total loan portfolio at the period of approval.

Mr Gimba Ya’ukumo, the Managing Director of FMBN disclosed that the FCT alone generated N20.7 billion, out of a total of N64.8 billion the bank collected through the National Housing Fund (NHF) scheme as at December 31st 2010.

Also within the period, the federal government commissioned a set of 141 housing units in Irette, Owerri in Imo State capital.  This is part of the Federal Government’s plans to provide new layouts in city centres across the country, as a means of reducing urban congestion.

In 2011, the rate of building collapse was drastically reduced, as compared to previous years. There were just few reports of collapse of building in the year across the country, and this could be possible through awareness campaign by various professional groups and government agencies.

In Rivers State, the demand for housing stock grew within the first quarter of the year, but gradually diminished within the second quarter, particularly for residential accommodation.

Within the later part of the second quarter to the third quarter of the year, some residential apartments were vacant, especially in the categorised of self contain, one, two and three bedrooms apartments, as investigations showed that the cost of rental was high, coupled with limited cash flow in the system.

The Diamond Bank Estate Company offered for sale and rent, some of their properties at the Diamond Estate along Ada-George Road by Elioparanwo Road in Port Harcourt, and the advert publicity went on in newspapers for almost one year without any bargain struck on sale or rentage of the properties.

Also, Afribank estate had similar project, but with very minimal response, but findings revealed that such properties offered for sale and rental are for the high income earners, whereas, the bulk of demand for housing are in the low and medium income categories who need affordable houses.

Ideally, demand for affordable mass housing was very high, but the supply was very low and inadequate, and the advanced had been that mortgage facilities were not available, as such takes in longer time to recoup, than the investments made for high income earners, which mortgage period is short and with high profit, as buyers capable of parting with as much as N35 million to N45 million.

Knowing this fact, the Governor of Rivers State, Rt. Hon. Chibuike Amaechi in his interaction with Journalists in the last quarter of 2011 reiterated government efforts in providing affordable housing for the people.

He said government will not let the Diobu housing estate to die, as it is meant to benefit low income earners, and that N21 billion will be committed to it, in the long-run, while about N9 billion had already be committed.

One outstanding problem that put a challenge to housing development in 2011 was that of mortgage financing, as many primary mortgage institutions were not willing to commit their inadequate resources to a long-term mortgage programme.

So as to strengthen the long-term mortgage funding in Nigeria, the Central Bank of Nigeria (CBN) in the middle last quarter of 2011 issued a deadline for recapitalization of all PMIs across the country.

CBN through a directive from the director, other financial institutions department (OFID), Femi Fabanwo at directed that all the PMIs that operate at the state level recapitalize with the sum of N2.5 billion, while those that would operate as a National PMI to recapitalize with N5 billion or before December 2012.

Actually what the people are looking up to is a situation where there will be mass housing, and such that will be affordable and readily available.

It is for this same reason that a group, the Social Housing Advocacy Group (SHAG) in later part of October, 2011 came up with a resolution, which was signed by its chairman, Architect Nya-Etok Ezekiel, stating its resolve to champion the realization of delivering one million housing unit annually in order to increase the housing stock where the low income group will be the specific target group.

The group also declared support for sustained investment in mass housing and affirmed that housing development is the bedrock of the economy of developed nations, which contribute between 30 to 70 per cent of their Gross Domestic Product (GDP).

In all the housing sector in the 2011 witnessed some major events in terms of progress, even in the face of some challenges of sorts.

However, these challenges have given room to programmes and decisions among various groups and government agencies, aimed at advancing the sector and it is obvious the better things are coming on board through such decisions being taken.

Corlins Walter