ECONOMY - 18 JAN 2017

Bridging the Housing Gap

Bridging the Housing Gap
Chois Gardens is part of the Lagos Home Ownership Mortgage Scheme, (Lagos HOMS) introduced by former Lagos state governor, Mr. B. Fashola SAN. It is aimed at providing affordable housing in the state.

Economic growth in Lagos State, Nigeria's commercial hub, has failed to keep up with rapid population growth. This growth, already taking the population to a reported 21 million, looks unrelenting with an estimated 85 new residents arriving every hour. It is unsurprising that population growth has been so strong; the state is the most commercially oriented in Nigeria and attracts entrepreneurs from both within and outside the country. By 2050, Lagos' population is expected to double, making it the third largest city in the world, but with poorer infrastructure than much smaller cities. Particularly, as the population booms, pressure on the housing market is intensified.


Slums and Finite Spaces

The shortage of affordable housing in Lagos accounts for a significant portion of the national housing deficit. This deficit is both quantitative and qualitative.

Lagosians have devised creative housing solutions; inhabiting deficient and unsafe structures; erecting rickety ones in any available space, oceans inclusive; to squatting in congested rooms. The “hustler” appeal of Lagos attracts a large number of unskilled and unemployed migrants to the city, usually from rural parts of Nigeria. Some of these migrants find it most affordable to live in already existing slums or start new ones – leading to the spread of slums.

Between 1985 and 2010, the number of slums in Lagos doubled. These slums are overcrowded, unhygienic environments with stagnant waste and little to no access to clean water which leads to poor health conditions for residents. Security is minimal as security forces hardly venture into these areas. Instead, security is provided by “area boys”, vigilante groups made up of young, usually unemployed youth, who defend their communities, often through violent means. 

The spread of slums is noteworthy given the challenge of finite space for home construction. In the last few decades, we have seen efforts to expand this space, whether through the extension of the Lekki-Ajah axis or by reclaiming land from the ocean, as with Eko Atlantic. Housing estates have sprouted, especially in the former. Unfortunately, as some buildings are going up, some are falling down. Corruption and lax regulatory enforcement have made it possible for buildings to go up unchecked. A mix of poor workmanship, negligent contractors, and corrupt inspectors leaves buildings, even newly constructed ones, collapsing. Tragically, this usually comes with the loss of lives. And such instances have occurred in both high and low income parts of the city. 


Luxury or Affordable?

But there is one way that high and low income areas vary significantly: vacancy rates. The concentration of housing and income has stratified the city. On the one hand, there is an excess supply of luxury housing in high-income low-density neighbourhoods such as Banana Island, Ikoyi, and Victoria Island. It is not unusual to see various unoccupied housing units, usually high-rise luxury apartment buildings, with realtor signs hanging outside for months unending. Last August, the number of vacant properties in these neighbourhoods had risen 72 percent from the previous year. These higher vacancy rates imply excess supply which should translate to lower prices as landlords reduce price tags to encourage people to buy or rent these properties. However, these lower prices are yet to be realised, partly because property owners refuse to lock-in early losses in light of the considerable capital expenditure used to fund such developments. 


Buy or Rent?

As house prices remain high, the issue of affordability puts focus on the trade-off between buying and renting. In Nigeria, there is a strong cultural appeal of building or buying your own home. It is common practice for people to buy a parcel of land and then spend time, often over a year, in building a home at a pace and style that is most affordable for them. But in today's reality, culture takes a backseat. Sixty percent of Lagos residents are tenants. Many are required to pay a full year's rent upfront. This makes young Nigerians less able – and less willing – to move out of family homes. And those who do not have that option? Rent eats a significant chunk of their income, leaving little available for savings. Fortunately, private companies like are providing some respite by offering the opportunity to rent quality homes and pay monthly. 


How the State Government is Helping 

At the public end, certain Lagos State Government programs have tried to provide low-cost housing for citizens of the state. The most recent is the Lagos Home Ownership Mortgage Scheme (HOMS) launched in 2014 with the aim of helping first-time property buyers in Lagos to become homeowners. Through the scheme, homeowners put down 30 percent of the cost of the house and pay the balance over a period of 10 years or more. Last November, on account of the current recession, the state slashed prices of the housing units under the scheme, some by as much as 50 percent. 

HOMS has contributed towards getting more people on the property ladder. Unfortunately, the 30 percent upfront equity contribution has proven prohibitive for many and to reflect this, the Rent-to-Own policy was introduced. Under this arrangement, participants pay 5 percent of the value of the housing unit as a commitment fee, with the balance spread over the next 10 years. The program allows the tenant to live on the property while acquiring ownership through a fixed rent within the period of ten years.

Following the price reductions and adjustments, demand for these programs is sure to increase. However, the housing units available through these programs are limited and lucky recipients are chosen via lottery. 

The population growth trajectory is clear. Housing is less clear but has continually received little attention. This makes it especially urgent that an affordable and sustainable solution is found. Despite recent achievements, work still needs to be done to bridge the gap. The poor and lower middle class, in particular, need help. Lagos may boom but it needs it housing market to boom alongside it. 


Follow this Writer on Twitter @kikianizoba. Subscribe to read more articles here.

Nkiru Anizoba

Nkiru Anizoba

Read Latest

Nigeria’s new railway game plan: states take the lead

PREMIUM - 31 MAR 2023

Can WhatsApp help startups scale?

PREMIUM - 30 MAR 2023

What drives crude oil prices?

PREMIUM - 29 MAR 2023

Can digital payments outpace cash transactions in Nigeria?

PREMIUM - 28 MAR 2023

Download our mobile app for a more immersive reading experience

Scan QR code
mobile download