Agents are cautiously optimistic about housing despite political reforms

There have been regulatory changes in the real estate sector that may affect the functioning of the housing market. The nature and scope of these changes were enormous and affected construction activities. Nevertheless, the housing ministry is seeking support for its reforms and has expressed commitment to keeping its promises to Nigerians, while some experts want the government to reduce the price of construction materials, improve quality of life and boost economic development, writes CHINEDUM UWAEGBULAM

As the year progresses, the Bola Tinubu administration finds itself at a pivotal political moment in which the prevailing winds of change are gripping the housing industry, driven by a society that is increasingly talking about economic disparities, housing affordability and social justice.

Under the current All Progressives Congress (APC) government, several policies and economic factors have played a key role in shaping the real estate market. The government’s approach has largely focused on stimulating economic growth and maintaining the country’s status as an attractive destination for foreign investment.

In this context, the real estate market, especially the commercial real estate sector, has become a barometer of the country’s economic condition and social equality. The inflation trend and the exchange rate have combined to create economic conditions in which the only certainty is uncertainty.

There have been many changes in the real estate industry over the past year. Today, skyrocketing real estate prices have pushed up rents in major cities and new home prices by more than 37% for low- and middle-income earners, raising questions about housing affordability and inequality.

While affluent areas across the country, particularly in Abuja, Lagos, Port-Harcourt and Kano, feature high-value residential properties, fluctuations in the domestic naira against foreign currencies have made it difficult for the market to attract international buyers and new investors, especially in the retail sector.

As a result, the market was sluggish, and new buildings rarely appeared in some locations due to the rising costs of building materials such as cement, iron rods, sand, granites, and finishes. The prices of materials that were within reach a few months ago have almost doubled, which has forced many developers to leave their locations, suspend projects and limit the scale of investments.

Economic factors such as high interest rates also played a key role. It keeps the cost of external financing high, which causes low supply in the real estate market. Some developers continue to increase off-plan sales prices due to currency fluctuations, while others have adopted dollar rates for new apartments.

Reacting, the Minister of Housing and Urban Development, Ahmed Dangiwa, said the ministry’s broad strategy focuses on the three main pillars of Tinubu’s Renewed Hope Agenda, including economic development, lifting 100 million Nigerians out of poverty and creating an enabling environment for investments to thrive.

He stressed the government’s commitment to deliver on its promise to Nigerians, adding that the ministry has achieved significant success in the areas of affordable housing provision, slum upgrading and the implementation of sector-wide reforms to position the housing and urban sector as a key enabler of the social and economic well-being of Nigerians .

The minister said the government is working to increase the production of construction materials in the country to reduce the cost of construction materials. “This will deliver economic growth, create jobs and reduce import dependence as we inaugurate the Construction Materials Manufacturing Task Force. They will conduct an in-depth assessment of the current state of the construction materials production sector and develop a strategic plan for reform of the sector.

“To increase housing resources, we have also launched a Multi-Agency Project Implementation Team. The team will ensure that all housing agencies work together to optimize their strengths to provide Nigerians with decent and affordable housing. We are also working to implement much-needed reforms that will ensure quick, easy and effective access to land,” Dangiwa said.

Highlighting the seriousness of the ministry in leaving no building unoccupied, Dangiwa explained that steps have been taken to expedite the sale and occupancy of residential units under the National Housing Program by leveraging four subscription windows namely direct payment, mortgage, rent-to-own and installment payment.

He revealed that a total of 6,612 apartments of various types are currently under construction across the country as part of the Renewed Hope Cities and Estates program launched in February this year, the first stage of which is the delivery of 50,000 apartments.

“Cities will have 1,000 units per location in one location in each of the six geopolitical zones in the country and the FCT, while estates will have 500 units per location in the remaining 30 states,” he said.

Talking about affordability and convenience, he said: “We have designed cities as integrated living communities, targeting all income groups. These include one-bedroom blocks, two-bedroom blocks and three-bedroom blocks; terraces with two, three and four bedrooms, four-bedroom maisonettes and five-bedroom maisonettes.

“On the other hand, we have designed the estates to meet the needs of low- and moderate-income people. They consist of semi-detached bungalows with one, two and three bedrooms. To increase affordability and ease of collection, we have used organic designs where one bedroom can be converted into two and three bedrooms as the beneficiaries’ income increases.

“We received a total of 8,925 expressions of interest. This includes 1,294 for outright purchase, 2,408 for mortgage, 2,184 for rent to own and 3,039 for hire purchase. We have released the first batch of offers of new provisional allotment letters for immediate payment to selected applicants,” he explained.

The minister further disclosed that under slum upgrading and urban regeneration, the ministry is planning a total of 26 areas across the country, four in each geopolitical zone and two in the FCT. “The key services that will be provided in these locations include water supply, solar street lighting, renovation of access roads, construction of sewage systems, and waste management and sanitation services,” he noted.

However, Nigerian Institute of Town Planners (NITP) president Nathaniel Atebije told The Guardian: “In the first year of this administration, I have not seen any realistic efforts to provide housing for Nigerians. It was just propaganda for launching programs without any plan.

“There are some urban development attempts to improve infrastructure. We will continue to argue that any development that is not preceded by planning by appropriate professionals is a misdirection of resources. In terms of urban development, this will end up creating glorified urban slums.”

According to him, “housing affordability has skyrocketed, homelessness has increased, the quality of the housing environment continues to deteriorate and sanitation in residential environments is poor. They are definitely below expectations. Housing is politicized rather than planned and implemented in a pragmatic way. Poor consultation with key stakeholders, poor budgetary provisions and lack of strong political will.”

“We need a National Housing Summit to discuss further solutions. A realistic housing policy needs to be developed and implemented. Stakeholders and potential beneficiaries should be consulted. Physical plans must be drawn up before implementation. Before building houses, infrastructure must be provided,” Atebije added.

A professor of real estate management at the University of Lagos, Timothy Nubi, has urged the government to provide a conducive environment for private individuals to build houses. According to him, 90 percent of the country’s houses were built by private individuals.

He suggested government intervention to reduce the prices of construction materials, especially cement and iron rods, as well as the establishment of enterprises for the wholesale purchase of construction materials. He also recommended tax exemptions or tax holidays for manufacturers of construction materials to enable them to reduce production costs.

Nubi noted that the housing problem will not be solved by building new cities, but rather by increasing the number of loans for home renovation and urban regeneration projects, adding that the government’s current projects are not comprehensive.

In the case of the Housing Development Advocacy Network (HDAN), the federal government should declare a state of emergency in the housing industry amid the looming housing crisis in the country.

Executive Director Festus Adebayo has said the government should take a more pragmatic approach to the housing situation, saying the discovery of people living under bridges in Lagos State reflects the housing deficit in Nigeria.

He said: “The economic downturn has further increased pressure on the housing industry as citizens now find themselves in difficult and inhumane conditions.”

HDAN also condemned the creation of numerous bottlenecks that developers must navigate before obtaining building permits. He also criticized the requirement for multiple payments, which undoubtedly constitutes a barrier to the provision of affordable housing. “This may explain why many developers resort to prevarication and manipulation to reduce costs,” Adebayo added.

The Managing Director of Nigeria Integrated Social Housing (NISH) Affordable Housing Limited, Dr. Yemi Adelakun, has said the President’s decision to establish a separate Ministry of Housing and Urban Development has strengthened the Renewed Hope housing program.

He said it was too early to judge the administration’s housing performance in one year because the key performance indicator was the number of affordable homes built, completed and occupied.

“The partnership agreement with the consortium is heading in the right direction. This partnership agreement is a better approach than the procurement method used by the last administration. Similarly, the recently launched housing portal will be an additional factor influencing the matching of housing supply to demand.

“However, financing target audiences may pose challenges unless appropriate provisions are put in place to address the adequacy, availability and affordability of funds. Partnerships with other consortiums should be encouraged for scale, speed and competitiveness, rather than committing to one consortium across the country.

“Transparency and accountability regarding the terms and implementation of the partnership agreement should be the norm, not the exception. Domestic production of building materials must be encouraged and promoted, and building the capacity of specialists and craftsmen in the construction industry is a prerequisite for the success of the current administration’s renewed hope housing program,” he said.