Nigeria's mortgage penetration remains extremely low, HDAN report finds
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A report by the Housing Development Advocacy Network says Nigeria's mortgage penetration remains extremely low, blaming short-term money, high interest rates and weak land administration rather than a lack of demand.
Nigeria's mortgage penetration remains extremely low compared with more developed housing-finance markets, a report by the Housing Development Advocacy Network (HDAN) has disclosed. The report said the problem was not a lack of demand, as millions of Nigerians are eager to own homes, but the absence of a virile mortgage system.
The report said the country is 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. Researchers likened building houses without building the mortgage system to building airports without runways, and said a mortgage cannot perform magic because extending repayment over 20 years does not automatically make an unaffordable house affordable.
According to the report, every major housing programme should answer five questions from the beginning: who the target buyer is, what that person earns, what mortgage that income can realistically support, at what interest rate, and where the long-term money will come from. The researchers said 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 report also called for a reduction in the cost of producing houses, noting that land, cement, infrastructure, development finance, approvals and building materials influence the final price. It said Nigeria must build the financial system that enables people to buy houses alongside the houses themselves, warning that otherwise the country will continue commissioning homes while millions of citizens remain unable to afford them.