By Foster Obi
As property market receives a boost following rise in prices in the United Kingdom (UK) by about 0.4% in the last month, pushing the national average to a new record of £305,732 according to property website’s House Price Index, Nigeria realtors are highly expectant of a reversal in fortune.
Nigeria’s housing market since 2015 remains depressed, undermined by a combination of problems – economic recession, high interest rates, high inflation, rising unemployment, as well as worsening insurgencies. Demand has fallen sharply. House prices also declining, especially in real terms.
From reports, in Lagos Island, house prices fell by 5.58% during 2016, after an annual decline of 25% in 2015 and y-o-y rises of 4.62% in 2014, 11.14% in 2013, 4.62% in 2012, and 28.87% in 2011. When adjusted for inflation, house prices in Lagos Island actually dipped a dramatic 18.17% during 2016.
On Lagos Mainland, average house prices rose by a modest 2.33% during 2016, a sharp slowdown from y-o-y growth of 20% the previous year, according to Residential Auctions Company (RAC). However due to high inflation, this translates, in real terms, into house prices dropping 11.3% y-o-y in 2016. Lagos remains the most expensive city in Africa in 2016, according to real estate firm Savills, despite falling house prices and rents.
The average price of four- to five-bedroom houses in Lagos Mainland was NGN 75.51 million (US$239,900) in 2016 while similar properties in the Lagos Island cost around NGN 172.21 million (US$547,150), according to RAC. The house price index in Lagos Island represents the high-end market in Nigeria. On the other hand, Lagos Mainland’s house price index represents price movements in the mainstream market.
Meanwhile the boost in the UK market also manifested that, with sellers achieving more than 96% of their asking price across the country. Report shows that there was a gap of just over £10,000 between the final asking price and the amount for which a home actually sold.
Miles Shipside, director and housing market analyst at Right move, explained this was an average figure and could only be tracked on properties which had actually sold. He added: “Property that is over-priced and has not yet sold may need to be priced more attractively in order to attract a buyer in the first place.
However, regardless of the poor performance of the real estate industry and the drop in the property market in recent times, stakeholders recently expressed optimism of a full recovery this year. The Statistician-General of the Federation and Chief Executive Officer, National Bureau of Statistics, Dr. Yemi Kale, said although the real estate industry, which contributed 6.79 percent to real Gross Domestic Product (GDP), dropped to 4.12 percent in the third quarter of 2017, with interest rates currently steady within the lower double-digits and monetary policy keeping a keen eye on inflation trends and minimising inflationary pressure, stakeholders in real estate sector should expect a recovery in 2018.
Kale and others professionals spoke about ‘the aftermath of recession: Where do we go from here’. The statistician-general, who was represented by his Technical Adviser, Lola Talabi-Oni, said the Nigerian economy, despite being susceptible to internal shocks such as insecurity, and external shocks from fluctuating global oil prices, among others, would, according to the World Bank forecast, experience modest growth in 2018. He stated, “The strong momentum of the global economy is expected to continue into 2018 with a forecasted global GDP growth of 3.9 percent by the IMF.
