Towards a Sustainable Housing Finance in Nigeria: The Challenges of Developing Adequate Housing Stock and a Road Map

Housing Finance International

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Date Published 2010
Primary Author Dr. Timothy Gbenga Nubi
Other Authors
Country Nigeria


This study acknowledges the importance of housing in the economy of any nation and the mortgage market as a measure of economic vibrancy. While mortgages account for more than 70% of the GDP in developed economies, it is less than 1% in Nigeria. Despite several efforts that have been made to develop the mortgage system in Nigeria, very little success is recorded due to a number of restrictions. Past studies on housing finance in emerging economies rarely consider the nexus between housing supply and housing finance. The poor performance of the construction industry especially the home builders or housing developers is identified as a major hindrance to the development of a robust mortgage system (Nubi 2006). This study is a combination of a field study and the use of secondary data to examine the structure, operations and factors that restrict the operations of housing developers in Nigeria. The study revealed that Nigeria has neither a single indigenous construction company capable of handling large scale projects nor a real estate developer that builds more than 100 housing units per annum. The developers rely mostly on loans from commercial banks and cannot access the long term finance that the capital market offers. All this has contributed to the deficit of about 14 million quality homes needed to create mortgages that should considerably revive the industry. The paper therefore recommends that developers should team up to undertake large scale projects while concerted efforts should be made to encourage new entrants into the market. Construction costs should be reduced by reducing the cost of land and documentation while the use of locally sourced material and skills are promoted.

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