This is not the best of times for property investors in London, among which are many buy-to-let Nigerians. The market is struggling under the weighty impact of Britain’s planned exit (Brexit) from the European Union as well as unfavourable tax regime.
The dominant and significant economic, social and political discourse in London today is Brexit, more so as the parliament sets to vote for this historic ‘no-deal’ exit.
It is not difficult to see a correlation between the Brexit impact on the London property market and the partly concluded, partly inconclusive general elections on the Nigerian property market, especially that of Lagos, which is the country’s largest and most thriving property investment destination.
Activities leading up to the elections came with so much uncertainty and apprehension that investors had to hold back investment just as both buyers and sellers adopted a wait-and-see attitude, creating a lull that was not seen before in the market in over 10 years after the economic meltdown in 2007/2008.
Similarly, in the London market, potential buyers and sellers, and particularly investors, continue to hold off on their plans until political uncertainty has eased and there is a clearer idea of the post-Brexit market.
However, Propertywire, an online house market tracking platform, notes that there is still movement in the market, and properties priced correctly are selling well while the current market is being driven by ‘needs-based’ buyers looking for value rather than investment.
Tax is another major issue in the London market as it continues to stifle investment in central London, but according to Winkworth, another market tracker, Brexit negotiations, or lack of, remain at the forefront for investors.
As obtains in the Nigerian market where investment focus has shifted to small-size and multi-family units, Ray Clancy, Propertywire editor, reports that small to medium-sized flats have dominated transactions not just in the past quarter of 2018, but over the year.
MKO Balogun, CEO, Global PFI, confirmed to BusinessDay in an interview that new investment interests favour small-size apartments of one- and two-bedroom apartments, pointing out that over 60 percent of home-buyers today are not looking for three- or four-bedroom apartments.
“This is where opportunities exist in the market at the moment,” Balogun said. “Unlike the large-size apartments market, there is no vacancy here, because demand is here. Start a development that will deliver these small-size apartments and in less than six months, they will be sold out.”
Clancy said there is a shortage of supply of good size-family homes, which means that they are being snapped up immediately they become available. But fewer of these are coming to market as a result of uncertainty.
“Despite the slower market, the quality of homes coming to market has improved and this is reflected in the average price per square foot which has increased while actual asking prices have decreased,” Clancy said.
“Overall, although sentiment is very different to this time four years ago, it’s evident that there is still stability in the market and the firm expects it to remain much the same for some time until a clearer outlook for the UK is given,” he said.
The average price sold per square foot, the editor said, increased in the quarter by 6 percent, although average asking price and average sold price decreased by 2.1 percent and 2.2 percent, respectively. This, the report says, demonstrates the better quality of stock coming to market, so although prices are slightly down, the quality of properties on the market is actually better.
“Sales, however, remained static compared with both the previous quarter and the same quarter last year. They were almost 30 percent below the peak levels seen in 2014, before the stamp duty changes came into effect. Transactions for smaller properties dominated activity in the third quarter of 2018, with one- and two-bedroom homes accounting for 67 percent of all transactions,” Clancy said.
CHUKA UROKO
