ESV George Okwudili Endelyn is a registered Estate Surveyor and Valuer. He is the Principal Partner of George-Lyn & Co, a leading firm of Estate Surveyors and Valuers with headquarters in Awka, Anambra State, Nigeria. In this short story, he professionally argued that high lending rate is the bane of real estate development in Nigeria.
In Nigeria today, all macroeconomic indicators are in the red, making it very difficult for businesses in all sectors of the economy to operate with little or no profits. In the real estate sector, embarking on high profile projects requires a lot of funds to execute, and the rate of accessing mortgage loans from the designated financial institutions. The current monetary policies of the federal government are not fair deals for the real estate sector, especially developers who rely on the financial institutions for the needed huge funds for estate and luxury real estate developments.
Even with the growing Nigerian housing deficits, and high interest rates, accessing the loans from commercial banks and mortgage institutions is not an easy task for real estate investors. The Nigerian housing deficit is over 29Million at present and over 60Million Nigerians are facing a housing crisis, and the needed funds to build houses and bridge this gap is evidently lacking. Most Nigerians that are facing a housing crisis are actually low-income earners who cannot afford decent houses even in the event of availability. Over the years, the government has come up with a lot of programmes aid at addressing the housing challenges. Unfortunately, most of these programmes have failed due to corruption and bad government policies.
The high cost of mortgage financing has been the bane of real estate development in Nigeria both for those developing for private use and those developing for commercial purposes. The unfriendly interest rate is so high that most developers cannot afford it. The mortgage institutions are even starved of funds that they cannot cater for all loan applications by private and institutional developers.
On the way forward in addressing the high interest rate being experienced in the industry, federal government owned mortgage institutions as being led by the Federal Mortgage Bank of Nigeria (FMB) should be repositioned and recapitalised to cater for the growing housing demand in Nigeria. Most Nigerians are homeless today because of the inability of the government to address the financial needs of the sector. With the increasing lending rate for this important sector of the economy, housing deficit will remain a long-term problem in Nigeria.
Policies aimed at addressing the long housing finance problem should be developed by the government at all levels to cater for the needs of all categories of mortgage financing. The needed policies that will engender affordable housing development should be formulated and implemented to the latter. Above all, the needed macroeconomic environment should be provided by the government for businesses to thrive, make profit and discharge their tax obligations. As at when due.
ESV George Okwudili Endelyn is a registered Estate Surveyor and Valuer. He is the Principal Partner of George-Lyn & Co, a firm of Estate Surveyors and Valuers. He sends in this piece from Awka, Anambra State.