Experts remain upbeat about housing, mortgage finance growth

January 13, 2014 

A housing estate under construction in Igbogbo, Lagos
| credits: Segun Bakare

Based on activities in the housing sector in 2013, stakeholders are optimistic about the growth of the sector this year, MAUREEN AZUH writes

The housing and housing finance sector will grow in leaps in the coming months, experts in the sector have predicted.

Some of the experts, who spoke with our correspondent on the outlook for the different aspects of the sector for this year, were positive that the steps that were taken to reduce the housing deficit in the country in 2013 would be consolidated in 2014.

According to them, the predictions that the country’s economy will grow at a steady rate this year will rub off on the housing sector.

The President, Nigerian Institute of Building, Mr. Tunde Lasabi, said more developers would come into the sector in the course of the year.

He also expressed the hope that the Federal Government would facilitate the availability of building materials by reducing the import duty on them.

Lasabi said, “On the part of professionals, I expect a better collaboration, especially within the NIOB, so as to tackle fake materials. I expect that more private individuals will participate in activities in the housing sector.

“With a better economy, people are bound to put their resources into the sector either for sale, lease or ownership. We expect more professionals to be used by the government to prevent the scourge of building collapse. When buildings collapse, a lot of things are lost and it is not good for our economy, and a lot of these are caused by the use of fake materials and quackery.”

Experts also expressed optimism about improvements in the housing finance sector, especially with the expected take-off of the Nigerian Mortgage Finance Company.

The President, Mortgage Banking Association of Nigeria, Mr. Femi Johnson, said the recapitalisation of mortgage banks was a pointer to a better mortgage finance system in the country.

He said, “The CBN has increased the capital base of mortgage banks and come January, it will announce the new mortgage banks that will operate; maybe about 40 or 50 from the 80 that we have now; so, there are going to be bigger mortgage banks that can now lend longer because they have the capital.

“There is going to the NMRC that will take off maybe by the end of the first quarter and refinance loans at lower interest rates of 13- 15 per cent for 20 years so definitely, there will be an improvement when all these monies come into the system. There will be new long term funds that are going to come into the system and so these banks will be able to finance mortgages for longer terms.”

According to Johnson, the NMRC already has loan of about $250m at 0.75 per cent interest for 40 years and with a 10-year moratorium from the World Bank. The mortgage company will raise money from the capital market through government guaranteed bonds.

He stated, “The NMRC will be able to raise money that pension fund will be able to invest in. Today we have about N4tn to N5tn of pension funds in the market, and once the fund is government guaranteed, Pension Fund administrators will be able to invest in it; so, this money will be channelled into housing.

“So, definitely there will be a lot of money channelled into housing and housing finance this year; the outlook is bright.”

A private developer and Chief Executive Officer, PropertyGate, Mr. Adetokunbo Ajayi, said 2013 witnessed a pick up after the lull in the sector, which began in 2008, and the momentum that was gathered were expected to be improved upon in the course of the year.

He said, “We had a relatively strong showing on a comparative basis in 2013; so, we expect that it should continue in 2014. There has been an enabling environment and the financial institutions are also doing well by making mortgages available; we expect that things will improve from that end, especially with the coming on board of the NMRC.

“As the economy also improves, there will be access to housing from the financial capacity of the consuming public; when you look at these, they are pointers that we will have a better year than 2013.”

However, while many experts say the sector will witness huge growth, there are others who think that there may not be much difference from what happened in 2013.

The Principal Partner, Ubosi Eleh and Company, Mr. Chudi Ubosi, said access to credit was a problem in the previous year and needed to be improved upon in 2014.

“If what happened in 2013 is what will be repeated this year, there may not be much difference. For a couple of reasons, the major problems still remain lack of access to credit; if it is not improved upon, it will remain a major problem. And when it is available, it is still too expensive at 20 to 25 per cent interest; this is still a problem,” he said.

Ubosi added that even if the NMRC took off, it might not make a big difference in the sector.

He said, “I am not sure we have the framework for it to take off, but even if it takes off, I don’t see its effect that much until two years or more.

“There is also poor information flow in the country; so, a lot of people will not know about it, it is only the professionals like us that know and not the common man out there. I don’t expect a major deviation from what happened last year.”