There is a newly found over used word floating around the country at the moment which comes on the heels of our recently discovered very high GDP(Gross Domestic Product). It is called “Rebased”. In the Oxford dictionary the word “rebased” means “establishing a new base level” Since our GDP has found a new improved rebased level. I certainly hope our mortgage rates and housing finance structures can be also “rebased” in the near future. Mortgage rates and property prices at the moment are both too high to be affordable for the general population.
I have recently spotted two new Mortgage banks opening up in Lagos, which is hopefully a pointer that there is an interest in supporting the population in getting better mortgage rates to buy a roof over their heads. Mortgage interest rates still hover between 18% at the lowest and 22%, which is still much too high for comfortable payback on any loan, and does not make any real common sense! Why take a loan of N10million over 5 years, and have to pay back N2m in interest every year, without even paying off anything on the principal loan itself? It is widely written how Nigeria now has the highest GDP in the whole of Africa surpassing South Africa for the first time even though we have also been internationally rated as one of the poorest countries in the world where over 70% of our population live in poverty conditions and can hardly afford one square meal a day. Between 1980 and 1996 the country’s poverty level rose from 28% to over 70%. High GDP anywhere else in the world usually translates into fair/good living conditions and access to housing and infrastructure, but as we can all see, this has not yet been passed on to the general population in Nigeria. It therefore appears that there is some sort of disconnect which needs to be rectified. Hopefully this will be done partly by recognising the need for affordable mortgage finance and homes. In Lagos state alone there is allegedly a housing shortage of over two million homes. I must in all fairness recognize the Lagos State Governor who is already doing something to rectify the shortage quite successfully under his administration with the HOMS scheme which provides low cost homes at affordable mortgage rates. We need many more of these schemes in the state and country as a whole. Most private developers now work out payment plans with buyers which suits both parties better due to the unaffordable high mortgage rates available from banks and private mortgage institutions
The recently concluded Lagos State Economic Summit Conference (Ehingbeti) covered the need for affordable housing, but agreed that this was not achievable without stable electricity supply! The Power Minister addressed the appalling power situation and stated that the country as a whole should not expect improved power supply anytime soon due to the ageing and decrepit power infrastructure that is currently in place and cannot adequately transmit the available power. The growing unstable power supply has slowed the country’s real estate growth enormously due to the inability for our industries to manufacture cheaper home grown building materials like tiles, plumbing and electric fittings, sanitary wares, light fittings etc. A lot of developers choose to buy materials from China and Europe, adding to the cost of the property which is already out of the reach of most people. As more and more developers are building apartments and multi storey units to maximise their costs, the Lagos State Government has put a limit on the number of floors for residential buildings outside of Ikoyi and VI at four floors only. Anything four floors and above will need lifts and the unstable power supply makes this unachievable for low cost to medium cost developments and buyers. Getting electricity alone right, would see an immediate improvement in all aspects of the economy including housing and standard of living. Housing provision is not just a private developer responsibility, but must involve all aspects of government, federal, state and local, to ensure quality affordable homes are provided under regulated standards. I know it is a lot to ask right now, but it is achievable if small steps are undertaken by all sectors to ensure that the next few years show some transformational growth in the much needed property market