Key Constraints to Housing Development Finance in Nigeria.

Topics: Real estate, Mortgage, Bank Pages: 8 (2356 words) Published: July 28, 2012

Key Constraints to Housing Development Finance in Nigeria.


e-mail:, Tel.: +234 – 047-66701, 66707
047 – 66238 (DL)

JULY, 2012

Department of Estate Management and Valuation
School of Environmental Studies
The Federal Polytechnic Nasarawa,
Nasarawa State.
Email: Uzokwe_Lawrence@Yahoo.Com, 08059128950

The focus of this study is to examine the problems that are associated with housing development finance in Nigeria. The study attempts to explore the various sources of finance that are available for real property development with a view to determining the problems that hamper effective flow of fund. The study shows clearly those problems ranging from high interest rates to that of the numerous requirements from applicants for loan, which in most cases they find difficult to meet, bedeviled the financing of real properties in Nigeria. Besides, the inflationary rate in the country also contributes to the problems of financing real property development in Nigeria. It recommended among others that the Nigerian government should try to solve its economic problems such as inflation in order to minimize the problems that plague the financing of real estate development.

Key words: housing development, constraints, housing finance, fulcrum.


Appropriate financing is all-important to successful property investment and development. Various forms of finance on varying terms from diverse investing agencies are available to the property market. The principal field where various forms of investment finance are employed is that of development where every loan has to be specially personalized for an individual scheme and the particular stages within the scheme. Since housing development in particular involves huge capital expenditure. Finance is therefore an essential input, the nature of which is to provide capital to enable the enterprise operate commercially. The cost and availability of finance for housing development can influence the viability of such project. In spite of the importance of finance in housing development, there is shortage of information on the amount of funding that takes place, by whom, or the method used. Though this is not unexpected given the general characteristics of development funding.

Housing development finance can be looked at as the fund needed to Carryout real estate development and other related operations. It is an essential ingredient in modern day housing development and most large-scale development would not take their present scale without substantial credit. The housing finance system in Nigeria is not viable and this makes mobilization of finance and credit for housing development difficult. Finance constitutes a fundamental centerpiece in any real estate development; the ability of a developer to mobilize enough funds for the project determines largely, the success of the project. Finance is an all-important factor, a requirement and very crucial ingredients to projects, no matter their nature. It is basically the fulcrum, which sustains the lever for development projects. The performance of any housing finance system will depend primarily on the volume and nature of funds within the economy and the proportion of it that can be spread, mobilized or even dedicated for housing development. Housing finance can be viewed as the borrowing of money to carry out housing development. 2.2. SOURCES OF REAL ESTATE FINANCE IN NIGERIA

As a result of the huge capital outlay needed for housing development, developers usually source for fund in order to complement their equity capital. Large developers will usually have multiple funding arrangements with a variety of financial agencies....
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