Nigeria has an estimated 28 million housing deficit as of 2023, indicating that the country needs at least 28 million housing units to provide adequately for the population.
An estimated sum of N21 trillion is required to provide housing units to fill the deficit. This means the reals estate sector needs an investment of over N21 trillion to build sufficient housing entire population.
However, by the annual average rate of N7.47 trillion credit to the real estate sector, it will take an estimated three years to provide 28 million housing units for the population. This is on the premise that the population remains unchanged over this period.
But that cannot be the case as the population keeps increasing, creating more gaps in housing.
The Nigerian population has been growing by 3.2 percent annually, based on a 2006 population census estimate. This grew the population from 140 million in 2006 to an estimated 242 million in 2023.
This is why housing deficiency grew from 7 million in 1991 to 28 million in 2023, leading to overcrowded and obsolete housing infrastructure.
However, the paucity of credit to the real estate and construction sector has seen a growth in housing deficiency double that of the population between 1991 and 2023.
At an estimated population of 98 million in 1991, the country’s population grew to 242 million in 2023, a 148 per cent growth.
The housing deficit in the country increased from 7 million in 1991 to 28 million in 2023. This signifies a 300 per cent increase over the period, doubling the increase in population.
Thus, while the population increased by 148 per cent, the housing deficit increased by 300 per cent.
The causes of this growing housing shortage also grew from a simple to a more complex problem. In 1991, mortgage inefficiency was the sole cause of the housing shortage in the country.
Over the years, while this remained, other factors pulled their weight to create a more complex problem.
These additional factors are urban expansion, overpopulation, slum demolition, increased poverty, and urban migration.
Financial Requirement to Fill Housing Deficit
It is estimated that the housing sector needs N21 trillion to fill up the housing deficit in the country. Thus, the real estate sector needs an investment of over N21 trillion to provide the necessary infrastructure.
Analysis of the real estate sector investment shows the sector had an average annual investment of N7.47 trillion over the last 16 years. This implies that it will take the country three years of investment to provide for the current housing needs.
Credit investment of N10.08 trillion in 2010 was the highest in the sector. This amount equals 9.54 per cent of the total credit to the private sector, the highest between 2007 and 2022.
Overall, the credit to the sector has fluctuated over the years, going up in one year and down in the other. It does not respond to changes in total credit to the private sector as total credit to the private sector increased from 2011 to 2017.
Increased Investment comes with more Benefits
Analysis has shown that increased investment in the real estate sector will not only reduce the housing deficit in the country. It will also contribute significantly to the country’s GDP.
Dataphyte analysis shows that the sector’s contribution to the country’s GDP has been above 10 per cent for the last 8 years. Moreso, its contribution has increased over some.
There has been a 17.3 per cent increase in the sectoral contribution in 2022 over 2015.
Over the period, the least contribution was 11.3 per cent recorded in 2017. Its contribution increased up to 2021, where it contributed 14.9 per cent.
This implies that more social investment in the housing sector would not only contribute more to the country’s GDP but reduce the housing deficits in the country.