Rich But Can’t Buy A House. Nigerian Housing Crisis.

Middle incomes earners in Nigeria are finding it difficult owning their homes because of insufficient wages and high interest rates on mortgages in the country, a report has indicated.

The report by CNBC Africa captured the experience of some Nigerians as regards their attitude towards mortgages, which has been largely tied to low financial power of people as well as the high interest rate from mortgage providers.

The report, which was entitled: ‘Nigeria’s housing deficit problem,’ captured the experience of a 32-year old lawyer, Abies Akoptu, who has been living in her rented two-bedroom apartment in Port Harcourt for four years. The young legal practitioner said she had not been encouraged to take a mortgage because of the high interest rates attached to it, which she insisted were often too high for many middle earners to meet.

“I have never attempted to buy a house because Nigeria is not mortgage friendly.”

The interest rates for mortgage loans in Nigeria are between 22 and 24 per cent, rates which many citizens cannot meet. “I think these are some of the highest rates on the continent,” the report quoted Akoptu as saying.

Akoptu added that another problem that often makes it difficult for people to go for mortgages is the fact that a lot of people do not have “security of income.”

Akoptu’s view about “security of income” is perhaps buttressed by the opinions of housing experts who have been able to identify that one of the conditions which have to be met in order to qualify for a loan to buy a house in Nigeria is that the applicant needs to earn a minimum of N300,000 a month which is equivalent to an average of US$1,500.

But according to a World Bank data released in 2014, the average Nigerian earns only US$2,710, thus indicating that even if such people qualify for a home loan, repayment conditions become unaffordable while job security remains largely not guaranteed. As a result of all these, people are more comfortable paying rents. “It’s just safer with the economic challenges in Nigeria,” explains Akoptu.

In his recent remarks, Bosun Jeje, Commissioner for Housing at Lagos State, acknowledged that there is a housing deficit of 16 million in Nigeria.

In an interview with the media in Lagos, he explained that the government, in partnership with private investors, aimed to bridge the deficit by building affordable housing units. He added that the mortgage the government had set up for these units comes with a single digit interest rate, making them affordable to Nigerians.