The Housing Deficit in Nigeria and the Need for Affordable Housing Solutions. (2024)

A housing deficit occurs when a country's housing units are in limited supply. The causes of the housing deficit include lack of favorable government policies, high costs of construction materials, high property costs, and a lack of access to credit for potential homeowners. Housing, like food and clothing, is the most fundamental of the three basic human needs, its availability is critical to the well-being of all people. The lack of adequate housing affects people's health, safety, and productivity, as well as their ability to access education and other essential services and the performance of the real estate industry is one of the yardsticks used to assess a country's health.

In Nigeria, however, access to affordable housing has largely stayed a pipe dream for the vast majority, particularly the middle and lower classes which takes about 80% of the populace. The matter of housing deficit has gotten worse over time, with successive governments grappling with it. According to a publication by Central Bank of Nigeria (CBN), Nigeria’s housing deficit was at 7 million in 1991 and rose to 12 million in 2007, 14 million in 2010, 20 million units in 2019 and according to the Federal Mortgage Bank of Nigeria it is currently at 28 million units as at January 2023, this means that 28 million people or more are homeless. The CBN has estimated an amount of ₦21 trillion will be needed to finance this deficit, and with a growing population of 200 million Nigerians, the current deficit is extremely high.

Furthermore, experts believe that only 10% of those who want to own a home in Nigeria can afford it, either through purchase or personal construction, compared to 72% in the United States, 78% in the United Kingdom, 60% in China, 54% in South Korea, and 92% in Singapore.

In Nigeria, household expenditures and rental payments are rising faster than overall inflation, and with inflation currently at an all-time high of 21.91%, the overall cost of construction has increased sharply. The market's composition of available homes for purchase and rental has been irreversibly moving towards expensive homes, which has only made matters worse. However, a significant portion of the population yearns for and seeks affordable housing, both for purchase and for rent, which is contrary to actuality.

Despite these issues, real estate remains a significant contributor to Nigeria's GDP, accounting for approximately 10% of the Services sector and 6% of overall GDP in 2022, indicating that it is a growing and important sector in the economy; however, this growth does not necessarily imply that it is solving the problem of housing deficit. This is already a growing concern among developers who see a solution to this issue in the form of more Affordable Housing. Dr Stephen Akintayo, MD of Gtext Holdings, mentioned "accessibility" as a key to solving Nigeria's housing deficit in a discussion with TVC news, whereby a potential homeowner may have access to a property and be able to pay for such property over a longer period of time, allowing middle to low-income earners in Nigeria to own properties rather than just the wealthy.

The need for private sector participation to support the government is a main focus of the Federal Government Economic Sustainability Plan on Mass Housing. Lifting millions out of poverty will remain an impossible job for any government unless the housing sector and its complete ecosystem are integrated. A good example is the Lagos state government's plan to construct 7000 new homes for low-income earners which was announced in January 2022.

In Nigeria, housing is in desperate need, and its provision is dependent on the active participation of both the public and private sectors. Affordable housing delivery schemes must be incorporated into the formulation and implementation of housing policies and programs in Nigeria, which should not be the sole responsibility of the Federal Government to the exclusion of governments at both the state and local government levels. Through collaborative efforts, Nigeria can improve access to adequate and affordable housing and boost economic development in the country.