PROPERTY ARTICLES

More Nigerians are finding it difficult to own homes due to soaring prices, SAMSON ECHENIM writes.

In spite of the lingering credit crunch in the economy, property prices are soaring, making it difficult for many Nigerians to own homes.

Banks’ refusal to lend in an era of zero tolerance for non-performing loans has also impacted negatively on access to funds. Yet, developers cling to the old price regime.

In an interview with our correspondent in Lagos, a captain of the real estate industry and President, Nigerian Institution of Estate Surveyors and Valuers, Mr. Bode Adediji, said many developers carried their perceptions of market prices of two or three years ago into the present situation.

According to him, annual home growth is progressing sluggishly, so, property prices must still come down drastically.

He said, "With 16 million home deficit, annual home growth rate remained poor, under 20,000 units per annum. The situation is that people are not buying homes due to lack of access to fund. Now even if you have N5m initial investment and you want to buy a home of N10m, no bank will lend you money. Before, if you had N2m, you could get the remaining N8m from your bank."

While noting that the country was still grossly under-built in all facets of real estate-commercial property or housing, Adediji said the N200bn asked for by the Real Estate Developers Association of Nigeria was a peanut compared to the problem on ground.

"It is going to remain tough for individuals to build their houses, if certain things, such as the cost of building materials and the mortgage system are not got right," he said.

According to the Principal Partner, Biyi Adesanya and Company, Ibadan, Mr. Biyi Adesanya, There is a "lull in the property market."

Adesanya said, "There is no effective demand, but I will not want to agree that homes are overvalued. Building materials, labour and funds have become so expensive. But we still have active market in Lagos, Port Harcourt, Kano and Abuja."

"If the mortgage system collapses, as we have now, the real estate sector suffers. The commercial banking concept, where people have to pay between 18 to 22 per cent for a very short term is inimical to home and property ownership. The sector needs credits that will cost less than 10 per cent rate, spread over, at least, 10-15 years. Effective mortgage system, especially for medium income earners, is indispensable."

According to the Chairman, Wemabod Estates Limited, Mr. Fatokun, the high cost of production- high cost of land, building materials, labour-and the credit freeze are all contributory to the high cost of homes.

A former head of the Osun State Property Development Corporation, Dosu Fatokun said, "There is no way the country can make housing available at this level of cost. Hardly can you get a three-bedroom flat for less than N3m. The question now is how many Nigerians can afford such an amount of money?"

He said the government must see housing as a social good and, therefore, must involve it in its provisions actively.

He said, "One issue that must be paramount in the mind of government is that housing must be classified as a social good. Governments had got it wrong all along by looking at housing as an economic good. Therefore, there must be budgetary allocations, year-in-year-out, to build houses and to give it out to the low and medium income earners at subsidised rates.

"To this effect, states should have housing development corporations. Some governors do not appreciate the problem. Our governor once told me, when I went to meet him for this, that housing was not a problem for our people because he believed that it was our culture for people to build their own homes without government’s assistance.

"I managed to convince him to build the workers’ housing estate and when we finally did, we sold them off with amazing speed. So we continued like that and increased allocations in subsequent years. Civil servants, unfortunately, are not having access to housing loans."

Fatokun advised that only professionals, who could drive the housing industry should be engaged, adding that they must have excellent knowledge of relevant funding market, such as the Federal Mortgage Bank and multinational donor agencies, among others.

"There are opportunities and there are constraints. Besides, governors can use housing programmes to attract investment in their states," he said.

Fatokun also explained that the amendment of the 1978 Land Use Act was inevitable.

He said, "They (government) also have to amend the 1978 Land Use Decree. It will be unfortunate if the act is not amended. Some of us are even calling for total abrogation, because it invests land in governments and governments have been using it as a political weapon and fanning the embers of corruption.

"You find out that our colleagues in the civil service own substantial interest in every estate. Again, it has got bottlenecks. It is not even realistic. How many schemes have governments created for the people who want to buy land? Theoretically, it is the state government that is supposed to provide land through property development, but now, they put a lot of problems before private developers."

He added that the government was discriminating against real estate investment as investors were made to get governors‘ consents, which was not the same for shares and dividend warrants.