Why millions of city dwellers still live in slums despite rising vacancy rate

Millions of people who live in Nigerian cities find homes in the slum areas of those same cities where, as in the cases of Abuja and Lagos, the rise in the number of unoccupied houses in both public and private estates has increased significantly in the last 12 months.

This is possible only in a country like Nigeria where there are a lot contradictions.Here is a country brimming with young and visionary citizens yet it is governed by an ageing, docile and tired generation that has nothing new to offer. It happens also in this country which nature has so blessed with large arable land, rich material resources, good climate, etc, yet over 70 percent of the citizens lives in want and woe because the commonwealth has been plundered by a small, predatory few.

This situation also arises in a country where the mortgage system has refused to grow amid a huge market because the operating environment is not only unsupportive, but also very hostile. With over 40 primary mortgage ‘lenders’, nobody gets mortgage from anybody because what the lenders give are commercial loans at interest rates that offend sensibilities in saner societies.

Housing, anywhere else in the world, is a basic necessity which, in the order of human needs, ranks third after food and clothing. But in this country, it is super luxury accessible and affordable by only the rich who constitute less than 10 percent of the country’s over 170 million population.

Besides its large and growing population, Nigeria also has rapid urbanization, growing at an estimated 2.8 percent per annum. The major cities of the country— Abuja, Lagos and Port Harcourt, harbor a combined population that can compare with those of West African countries put together.

These millions of slum dwellers are not there by choice but for reasons bordering on unaffordability or poverty, unwilling sellers in the market, legacy landlords, almost zero mortgage facility, insensitivity of government with its faltering policies, etc which work homeownership in the cities difficult.

The situation in the property market is a curious mix. Whereas the upper end market is struggling with over supply of houses with flat demand, the low-middle market has the problem of demand-supply imbalance.  The contradiction here again is that almost every investor wants to play in the already saturated upper end market in spite of fabulous opportunities in the low end market.

The market ended the first quarter of this year with over 40 percent vacancy rate; about 20 percent drop in demand at the upper end, and 10-15 percent rise in demand and price at the low end where majority of the city dwellers have or seek residence.

This situation has raised concerns among those who take interest in the state of housing and homeownership in the country and some of them recommend that the National Assembly should come up with a law to compel government to impose taxes on all unoccupied houses in the cities.

The taxes, they explain, will compel the owners of such empty houses to either sell or rent them out and by so doing, reduce the number of home seekers in the housing market, and also narrow the gap between housing demand and supply in the country.

Nigeria has about 17 million housing deficit, according to the United Nations, and it is estimated that Abuja, the federal capital territory with a population of  almost two million based on National Population Commission figures, carries 10 percent of this deficit.

A BusinessDay survey of the Abuja housing market shows housing estates in high-brow areas such as Asokoro, Gwarinpa, Maitama, , Wuse II, Utako, Katampe districts, etc where many  houses have been unoccupied for many years after they were completed.  Also many houses and estates in Apo, Dei-Dei, Gwarimpa, Lugbe, Kubwa, Gwarimpa , Gudu, Life Camp, Gaduwa are unoccupied.

“Most of those who own these houses are not bothered by not having any returns on their investments as many of them, particularly government officials and political office holders, have  used proceeds of corrupt practices to build them, either directly or using surrogates”, an estate manager who craved anonymity explained.

Though the Lagos State government is known for its efforts at providing housing for its citizens, its best is not good enough yet. With a population of about 20 million, Lagos has a housing deficit estimated at 3 million units which requires the state government to build consistently 187,000 housing units annually for the next 15 to 20 years to close that gap.

About 30 percent of its population, representing over 900,000 people cannot, on their own, afford homes and therefore, require some form of ‘cheap’ housing with government’s heavy input known as social housing.  Also, over 60 percent of its residents live in rented accommodation and majority of them are found in the states nine identified slum areas.

But this is a city where in places like Ikoyi, Victoria Island and Lekki, Udo Okonjo, CEO, Fine and Country says vacancy rate is on daily increase, attributing it to the economic downturn, families rethinking their priorities, people she called unmotivated sellers with products that don’t speak to market realities, etc.

A recent report on the state of Lagos housing market by the Pison Housing Company notes that the rate of rental default has increased. Roland Igbinoba, the company’s CEO, estimates that 71 percent of Lagosians default in their rent payment while 25 percent of them change residence for reasons bordering mainly on faltering income.