While homeownership is a dream for many Nigerians, the route to achieving that dream often looks different from what you might see in other countries. Unlike many developed nations where mortgages are the primary way to buy a house, personal savings remain the main option for Nigerians looking to purchase a property.
There are several factors contributing to this trend:
- Limited Mortgage Availability: Nigeria faces a challenge with the accessibility and affordability of mortgages. High-interest rates and low income levels often disqualify many potential borrowers. According to Adeniyi Akinlusi, a former CEO in the mortgage banking sector, many Nigerians simply cannot meet the income requirements for a mortgage due to the low minimum wage.
- Undercapitalized Mortgage Institutions: Another hurdle is the limited capital base of many Nigerian mortgage institutions, particularly primary mortgage banks. This restricts their ability to offer a wider range of loan products or more favorable terms.
Despite recent efforts to improve the situation, the housing gap in Nigeria continues to widen. Experts estimate the current deficit to be around 28 million units, a significant increase from just over a decade ago.
So, what are Nigerians to do? In the absence of readily available and affordable mortgages, many people resort to saving diligently over a long period. Others turn to informal lenders like friends, family, or workplace cooperatives for financial assistance.
What Needs to Change?
There is a growing consensus that change is needed to make homeownership a more attainable dream for Nigerians. Here are some potential solutions:
- Government Intervention: Many experts believe the government needs to play a more active role in supporting the mortgage market. This could involve measures to increase liquidity in mortgage institutions or offering subsidies to make mortgages more affordable.
- Increased Mortgage Products: A wider variety of mortgage products tailored to different income levels and needs could help expand access to homeownership.
While there are challenges, there are also reasons to be optimistic. The Nigerian housing market is vast and holds significant potential. By addressing the current limitations and fostering a more robust mortgage system, the dream of homeownership can become a reality for many more Nigerians.
