A major fallout of the Coronavirus pandemic is the significant drop in household income and consumer purchasing power generally. This has affected demand for everything including housing.
Many people, especially employees of private firms, have lost their jobs and those lucky enough to remain at work have taken pay cuts as a result of shrinking economic activities.
Demand for big budget houses like luxury villas, duplexes, and even large size apartments have therefore dropped, leading to a surge in demand for small-size family homes, particularly one bedroom and two-bedroom apartments.
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“That is the reality of the moment. It is part of the new normal we are all struggling to come to terms with. I can tell you that about 60 percent of people looking for homes to buy today are not looking for stand-alone houses, not even three or four-bedroom apartments. They are rather looking for one or two-bedroom apartment to buy. These are pocket-friendly homes,” MKO Balogun, CEO, Global PFI, confirmed to BusinessDay.
BusinessDay findings also show that while some landlords are now partitioning their apartments to reflect market realities, others are allowing what they call ‘fractional home-ownership’. “This is a situation where we allow up to three people to own an apartment of three-bedroom. They pool resources to buy the property and share the rental income,” Damola Akindolire, MD, Alpha Mead Development Company, explained on phone.
The impact of the Covid-19 pandemic on employees of private firms is such that some families living in rented flats and houses in city centres are now shifting to smaller apartments as part of measures to manage their meager income optimally.
Most economies including Nigeria’s are in tatters with massive job losses and pay cuts. Economists predict that post-Covid-19, many economies may slip into recession. That is a grim picture for Nigeria whose economy depends on oil revenue which has dropped significant at the international market.
James Okonta, a middle-aged man, works in an insurance firm on Lagos Island and lives in Okota, a Lagos suburb, where he pays N650,000 per annum for a three-bedroom apartment. Now because of the prevailing economic condition, he has had his pay cut by 50 percent.
Okonta says he has already approached an estate agent to help him find a cheaper and smaller apartment in places like Ejigbo, Ikotun-Egbe or Egbeda where he can still find two bedroom apartment for between N250,000 and N350,000 per annum.
Okonta is not alone in this predicament. There are several others like that who are vacating their ‘big homes’ and looking for smaller ones. “This cuts across low and highbrow locations in Lagos,” said Nathan Nfon, an estate manager, saying that they had been getting enquiries for small-size family homes more than ever before.
Nfon pointed out however that the full impact of the pandemic on housing market may not be felt in the immediate term as many tenants had paid their rents earlier in the year. “We will start seeing real challenge when most rents are due for renewal and that may take a little while from now,” he said.
