**Interview with Omolabake Fasogbon on Homeownership**
Owning a house is a common dream for many people. What are the primary paths available to achieve this dream?
Absolutely, homeownership can be realized through either buying or building. Each option comes with its own set of considerations, such as financing options, the time and commitment required, customization possibilities, and market dynamics, among others.
Many view property ownership as one of the best investments in the country, especially considering its appreciating value. Beyond just a financial decision, owning a home can also be a status symbol. However, many find themselves at a crossroads: should they buy or build? Both routes have their advantages and disadvantages, particularly in terms of financing.
For someone on a budget, how important is it to understand the financial dynamics of housing?
It’s crucial. Generally, building a home or owning one is often considered more affordable, allowing for greater flexibility. Kunle Awobodu, a former president of the Nigerian Institute of Building, mentioned that “building a house through direct labor might be cheaper than buying if the environment is the same and the quality is consistent.” He’s right in saying that investors in real estate typically aim for profit.
Yet, Debo Adejana, Managing Director of Realty Point Ltd, presents a contrasting view. What does he believe?
Adejana argues that when you look closely, buying a home often proves to be less expensive overall. He believes that if someone is cost-conscious and hunting for the best property deals, purchasing a home is the wiser choice. He pointed out that only those well-versed in construction can effectively navigate the additional costs that arise from unethical practices in the industry.
He states, “A buyer might end up paying significantly more due to the complexities of awarding contracts to less reliable builders. A beginner in real estate will struggle to combat these issues.”
How does financing play a role in choosing between buying and building?
Adejana emphasizes that financing a purchased home tends to be more economical and straightforward compared to self-construction, which often encounters financial hurdles. “In Nigeria, many build incrementally without a solid financing structure, which prolongs projects,” he explained. In contrast, when you buy a house, you can secure a mortgage or loan, allowing you to move into an apartment while avoiding rent payments.
What innovations are emerging in the housing sector to facilitate purchases for those without traditional financing options?
There are now flexible purchase options that allow for installment payments, making homeownership more accessible. Buyers can also influence on-site designs during construction, ensuring that they retain control over their vision.
Adejana points out that when the economy is functioning optimally, construction costs will likely increase. However, buying a home can take advantage of economies of scale, as developers often build multiple units, allowing for lower costs.
Tunde Macaulay, Managing Director of Refin Homes Limited, shares insights on the risks of incremental building in today’s inflationary environment. What are his thoughts?
Macaulay acknowledges that the costs of construction can quickly rise, especially without sufficient funding to secure essential materials like cement and reinforcement rods, which are subject to market fluctuations. Additionally, self-building necessitates hiring qualified professionals—architects, engineers, and surveyors—which can be expensive. He suggests that purchasing from reputable real estate firms alleviates these concerns, as such companies benefit from economies of scale and can manage risks effectively, even if they sell at a premium.
What about the hidden costs associated with buying a home, such as taxes, legal fees, and moving expenses?
While it’s true that buying a home can come with additional costs—potentially over 10% more—advocates of purchasing argue that these expenses don’t surpass the long-term benefits of buying a house. Furthermore, building a home incurs many other costs, including permits and related requirements, which can add up significantly.
Overall, it seems there are compelling arguments for both buying and building, depending on individual circumstances and preferences.
