The impact of the coronavirus pandemic is yet to rob off on the value of properties in Nigeria as prices increased by an average of 5 percent in April, two months after the virus was imported into the country.
While industry analysts expect the price of properties to drop due to the impact of the deadly virus on consumer spending, the monthly data by Nigeria Property Centre (NPC), a Nigerian real estate company, shows the prices of properties in major cities like Lagos and Abuja were either stable or on the increase since Nigeria reported its first Covid-19 case in February.
Analysis of the data by NPC shows that a two-bedroom house that was sold in Lagos for N20 million in March increased by 10percent and was valued at N22million in April. Meanwhile, in February, the same property was put up for N18.5 million.
For the same period under review, a price increase of 2.94 percent was recorded for a three-bedroom house in Abuja. As of April 2020, this kind of property sold for N35 million in Nigeria’s capital city. This is compared to the N34 million it was valued the month before. When the same analysis was done for a two-bedroom house, it returned a price increase of 1.6 percent.
As at the time of filing this report, industry experts said they were yet to determine the factors responsible for the price increase as it is contrary to their price forecast or perhaps the Covid-19 impact is yet to kick in.
“It’s difficult to tell what the drivers are for the increase,” a Lagos-based real estate analyst said on condition of anonymity.
Breakdown of the data by NPC reveals that the price of one-bedroom and three-bedroom flats in Lagos was the same for both March and April. Meanwhile, a two-bedroom flat in Nigeria’s business hub was reported to have increased by 5 percent in April. This kind of property was sold for N20 million in March but a month later its value was up by N1 million.
For rent, the prices in both Lagos and Abuja were, however, unstable. While two-bedroom apartment in some areas in Abuja saw an increase from N1.25 million in March to N1.27 million in April, the rent of the same property size in Lagos was flat.
“Even if the market goes down it will not remain there,” Temitope Oshikoya, Managing Principal, Nextnomics Advisory, said, adding that the continuous demand for housing will bail it out from the challenges caused by the pandemic.
Nigeria’s property market has been generally disrupted by the outbreak of the novel coronavirus as many industry players paused on their decisions to invest in the property market due to the fear of uncertainty created by the outbreak of the pandemic.
According to industry analysts, this is expected to fuel glut in the market and thus, lower property prices.
“What would happen is that supply will outstrip demand as the virus outbreak is expected to affect consumer behavior,” Chinua Azubike, MD/CEO, Infracredit, said adding that the demand-supply gap that will be created as a result of the Covid-19 will last for the short to medium term of say 9 months.
According to Jemil Dawodu, managing director, CBRE Excellerate, the expected glut in the real estate market is one that is inevitable but it will also present an opportunity Nigerians can tap from.
“Yes, there will be a market correction. Yes, there will be lower prices and that holds opportunity for potential home buyers,” Udo Okonjo, CEO/VC, Fine and Country West Africa said during a recent webinar by Mixta Africa with the title; Making Informed Investment Decisions in the Covid-19 Era.
Meanwhile, before the coronavirus pandemic, access to affordable housing in Nigeria was crippled by, among other factors, the lack of non-functioning mortgage system, high cost of property development buoyed by the country’s archaic Land Use Act.
Individual efforts at increasing Nigeria’s real estate properties by way of developing more houses have not helped to reduce the demand-supply gap or increased the ownership level estimated at more than 20 million units.
Despite its large-size population and self-acclaimed biggest economy in Africa, Nigeria is crawling behind its peers in terms of homeownership level in the country.
Whereas homeownership level is 84 percent in Indonesia, 75 percent in Kenya and 56 percent in South Africa, Nigeria, Africa’s most populous nation, has just 25 percent.