Bridging the gap through mass housing
Industry estimates suggest that about 100,000 new houses are built each year in Nigeria, compared to estimated demand of 700,000 units. The deficit nationally stands at 17 million units and the estimated cost of bridging this gap is N59.5trn (US$300bn).
Punitive mortgage interest rates
The absence of a vibrant mortgage market and the burden of high interest rates directly correlated with inflation are some key drivers of Nigeria’s housing deficit. The average mortgage rate is currently over 20% although the emergence of the Nigeria Mortgage Refinance Company raises hopes of a reduction. The latest report from the National Bureau of Statistics (NBS) shows headline inflation at 9.3% y/y in October.
CBN’s recent circular an addition to building costs
Compared to many other countries, construction is expensive. The cost of building a three bedroom apartment runs up to US$50,000, compared with US$36,000 in South Africa and US$26,000 in India. Following the CBN’s recent circular in June excluding certain imported items (such as building materials) from the official fx window, building costs are expected to rise even further.
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