Experts Advocate Mortgage Reforms to Drive Real Estate Growth in Nigeria
Housing experts have called for structural reforms in Nigeria's mortgage sector to improve access to home ownership for low-income earners and stimulate growth in the real estate industry. This appeal was made during a real estate roundtable webinar titled "Real Estate Outlook 2026: Market Reality Versus Expectation," organized by Bamigbola Consulting in Lagos.
Key Pillars for an Effective Mortgage System
Chief Executive Officer of UPDC Plc, Odunayo Ojo, emphasized that the mortgage system must be anchored on three key pillars to become effective and inclusive. First, affordable interest rates with long tenures of 20 years and above are essential. He noted that the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) aims to address this by providing loans at single-digit interest rates, a model common in developed economies that should be replicated locally.
Second, reducing construction costs is critical on the supply side, including infrastructure and land access. Third, improving income levels of Nigerians is necessary, as low incomes currently limit mortgage access. Ojo warned that if incomes remain low and costs high, only high-income earners will benefit from schemes like MREIF, using them for investment rather than housing needs.
Real Estate's Economic Impact and Challenges
Ojo observed that the real estate sector has emerged as a top contributor to Nigeria's Gross Domestic Product (GDP), driving employment and economic activity through its wide-ranging value chain. However, the capital-intensive nature of development limits individual participation, despite intervention funds such as the Family Homes Fund, MREIF, and the National Housing Fund (NHF).
He highlighted that while housing is a critical need, professionals should broaden their focus to include other segments like logistics, healthcare facilities, and commercial real estate, where significant returns are generated. Real estate remains a key store of value globally, but rising costs due to currency depreciation and inflation pose challenges. Ojo urged the government to introduce tax rebates and incentives for social housing investors to boost supply.
Affordability Crisis and Government Interventions
Senior Partner at Bamigbola Consulting, Dotun Bamigbola, noted that the real estate sector accounts for over five per cent of Nigeria's GDP, but property values have surged by 100 to 150 per cent in recent years, creating affordability challenges. For example, properties that sold for N100 million now go for N150 million to N200 million, straining low disposable incomes.
Bamigbola acknowledged recent government interventions, such as MREIF, which has processed about 1,000 loans at a maximum of N100 million and an interest rate of 9.75 per cent. However, he stressed that Nigeria still faces a housing deficit of about 15 million units, according to data from the Federal Ministry of Housing and Urban Development and the National Bureau of Statistics. Stronger incentives are needed to encourage private sector investment in low-income housing, addressing development costs and improving finance access to reduce the deficit.
