Housing Finance in Nigeria: Issues and Solutions


The purpose of this study is to elucidate why the housing finance system has remained inert and inefficient in the battle to expand housing supply. Secondary data were acquired for this study from published literature on books, journals, and the housing finance sector. The Housing Policy paved the way for an understanding of how the market operates. The historical check list technique explained the reasons for the failure of current practice. The purpose of this study is to examine the current state of the Nigerian housing sector, including the housing stock, to assess housing shortage and affordable housing policies in the Nigerian housing market, to make some significant recommendations for improving housing affordability in Nigeria, and to provide insight into financing options for housing construction in Nigeria, given the existing financial structures and regulatory framework. The conclusion is that we cannot just copy models from other countries but must design models that operate within our sociocultural environment. In this regard, recommendations are made that are inert and irrelevant to the housing supply drive.


Every country’s largest economic asset is housing, which has long been acknowledged as one of the most basic human needs. Community stability and social inclusion can only be achieved with adequate housing (Oladapo, 2006). Gilbertson. (2008) found a strong link between a person’s living environment and their bodily and psychological well-being. Since the right to shelter is a fundamental human right, it should be a characteristic of every civilized society and a measure of how far it has progressed.
However, one of the most persistent problems facing human and national development in Nigeria and other developing countries is the supply of suitable housing. All players, including government agencies and planners and developers have failed to come up with a formula for fixing the housing problem.

Finance is also a critical component of home development and has been referred to as the “lifeline” of real estate development. Adequate housing financing, according to Tibaijuka (2002) and Akinmoladun and Oluwoye (2007), is the foundation of any successful and long-lasting shelter project in developing countries like Nigeria, where quality and quantity of housing are woefully lacking. However, despite the importance of effective access to housing financing, potential homeowners in developing economies are finding it increasingly difficult to obtain it. It is common for people who prioritize homeownership to forego other domestic expenditures in order to achieve their goal. Personal income and savings, as well as the support of local cooperative societies, account for 60% of all new construction in Nigeria (National Bureau of Statistics NBS, 2012). Only 38% of North Central Nigerian households have formal bank accounts, according to the NBS’ 2012 Living Standard Measurement Survey (LSMS), and only 4% of those families use formal credit for home improvements, according to the national average. DMBs, micro-finance institutions (MFIs) and primary mortgage lenders all have formal credit lines (PMIs). Formal banking institutions appear to be the least reliable source of loans for prospective home builders in this instance. Studies have shown that formal financial institutions’ strict and burdensome lending practices have had an impact on the choice of financing options for homebuyers, shifting their preferences toward other informal sources of house financing (Ojo, 2005; Ndibe and Kuma, 2010).

Statement of the Problem

A number of empirical research on housing finance issues, notably in Nigeria, have yielded similar results that center around income/wage levels and the lending practices of formal financial institutions. To give just one example, Dung-Gwom and Mallo (2011) examine the difficulties that low-income families in Nigeria’s Plateau State face when trying to obtain a mortgage loan. In their examination into the availability of finances for private real estate developers in Abuja, Nigeria, Kabir and Ikem (2013) used a two-pronged method. First, it examines the variables that limit the availability of funds, and second, it examines the barriers to obtaining the funds. the three most major impediments to successful access to home finance were found to be high funding costs, construction costs, and challenges in securing statutory land titles


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