Nigeria’s mortgage penetration remains extremely low, compared with more developed housing-finance markets, report by HDAN has disclosed.
The problem, the report said was not lack of demand as millions of Nigerians are eager to own homes, but absence of virile mortgage system.
“The problem is that we are trying to run a long-term mortgage market with short-term money, high interest rates, expensive housing, cumbersome land administration and a financial system that excludes much of the informal economy,” it read
In the report, researchers likened building houses without building the mortgage system as building airports without runways.
The researchers noted that Nigeria keeps announcing housing projects as though the construction of houses alone will solve the housing crisis.
They said a mortgage cannot perform magic, because if a house costs N50 million and the intended buyer earns N300,000 or N500,000 monthly, extending repayment over 20 years does not automatically make that house affordable.
“A mortgage only spreads the cost. It does not correct an unaffordable house price,” the report read.
The experts said the country should stop trealing housing delivery and mortgage finance as separate conversations
“Every major housing programme should answer five questions from the beginning: Who is the target buyer?
What does that person earn? What mortgage can that income realistically support? At what interest rate? And where will the long-term money come from?
“ If government cannot answer those questions, calling the houses “affordable” do not make them affordable,” they said.
According to the report , Nigeria needs deeper long-term housing finance, stronger mortgage refinancing, cheaper and faster property titling, products for informal-sector workers, responsible mobilisation of pension and institutional capital, mortgage guarantees, rent-to-own options and shared-equity models.
The researchers called for reduction in the cost of producing houses, noting that land, cement, infrastructure, development finance, approvals and building materials would influence the final price.
According to them , Nigeria will need to build houses and the financial system that enables people to buy them.
Until we build a functioning mortgage ecosystem alongside our housing projects, they said that Nigeria will continue commissioning houses while millions of citizens stand outside the gate unable to afford them.
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