He also stressed the need for mortgage houses to contribute meaningfully to economy growth, by tackling the increasing challenges facing the housing sector.
Abdul said, “At an average of N3.5m per unit excluding cost of land, Nigeria requires about N56tn to remedy the housing deficit gap. The amount is 12 times the size of the country’s 2014 budget of N4.69tn.
“This means if every spending other than housing finance is put on hold, it will take Nigeria over 12 years to bridge the housing deficit. It would even take much longer time if the population growth is considered.”
He added, “Housing deficit in Lagos State is estimated at about 2.4 million units for a population of about 17 million that accounts for about 12 per cent of the country’s population and growth rate of eight per cent. “Lagos State has the highest out of the 17 million housing deficit in Nigeria for a population of over 160 million”
The Brent Mortgage boss reiterated that the recent recapitalisation of the mortgage institutions was “undoubtedly a critical step” in addressing the problem associated with finance in the sector.
He, however, called for the establishment of a mortgage intervention fund of at least N300bn over a period of five years to support the Federal Government’s social housing scheme.
This, he said, would help to provide the liquidity required to fund housing programme for the “one-third bottom in the income pyramid” that could not afford mortgages to be created by the business-end of the property market.
Abdul, who identified cumbersome legal regulatory framework for land titles as one of the constraints to the growth of the mortgage financing sector, noted that a substantial part of the “over N4tn pension fund” was expected to be easily attracted into a well structured market.
He called on the mortgage industry players to provide additional capital required to enhance the sector’s growth.
According to Abdul, other challenges facing mortgage financing include the inability of mortgage banks to access long term funds at single digits; small deposit portfolios that are short in tenor and high in pricing; and poor market visibility and lack of trust in mortgage banks by the public.
He also listed other problems as high incidence of asset-liability mismatches with resultant liquidity problems; customers’ preference for commercial banks; high operating cost structure, complex legal regulatory framework for land titling and property foreclosure in the event of default; and absence of secondary mortgage market.
On where the sector would be in the next five years, Abdul said, “It is hoped that the mortgage sector would have grown geometrically to contribute about 10 per cent to the Gross Domestic Product.
“The bazooka effect of recapitalsation, the coming on stream of the Nigeria Mortgage Refinance Company, the birth of a vibrant secondary market, listing of many mortgage banks in the capital market, enhanced mortgage knowledge and skill, increased inflows from foreign sources will impact tremendously on the sector. Certainly, there will be great departure from the 0.5 per cent contribution of the mortgage sector to the GDP in the next five years,” he said.
