THE GUARDIAN
This year isn’t the best of years for housing as existing deficits further worsened due to peculiarity of the environment. Issues such as inflation, fuel subsidy removal and naira scarcity impacted projects negatively and hampered most Nigerians from buying or renting homes, writes VICTOR GBONEGUN.
The outgoing year may go down in history as one of the toughest one for the real estate sector, as the macroeconomic, political and social environments dampened growth, and made the industry to perform below 50 per cent.
Inflation, high interest rate and skyrocketing foreign exchange rates, dwindled household income, and poor fiscal policies hindered development. More disturbing was the impact of the general elections, which halted local and foreign investors, while fuel subsidy removal and cash squeeze further limited investment in the industry.
Consequently, new buildings were few, access to land was difficult, a good number of buildings collapsed due to poor construction, flooding rendered people homeless, while property worth billions of naira were demolished for several reasons including being illegal or unsafe for human habitation.
With an estimated 28 million housing deficit currently, Nigeria would require about N21 trillion to bridge the gap, as the country has only 25 per cent homeownership level for its population of over 200 million, which is far behind its peers including South Africa, whose level is 70 per cent for a population of 56 million.
Policy implementation was also an issue in the sector at both states and federal levels. Checks by The Guardian revealed that most homes built by the states are beyond the reach of the low-income earners and accessibility was a major issue as homes developed are given out to politicians, who buy at cheaper rate and resell at high prices.
At the Federal level, prices of houses developed by the government are also high and conditions to access them remain cumbersome for the low-income earners, which constitutes the majority of the population.
Figures from the National Bureau of Statistics (NBS) indicate that Nigeria’s headline inflation rate surged to 27.33 per cent in October from 21.82 per cent in January 2023, a development that in turn impacted heavily on prices of building materials, housing and rents.
Prices of building materials like reinforcement, cement, sands, paints and sanitary wares rose by over 50 per cent, while the cost of buying new homes and rent went up by over 100 per cent in some locations. Many housing construction sites across the country were also abandoned due to the cost of construction that spiked.
The nation’s Gross Domestic Product (GDP) grew by 2.54 per cent (year-on-year) in real terms in the third quarter of 2023, higher than the 2.25per cent recorded in the third quarter of 2022 and higher than the second quarter 2023 growth of 2.51 per cent.
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