Nigerian Housing Market in 2012
The real estate market in Nigeria is not looking good for 2012. Following the federal government’s elimination of a petroleum subsidy, announced at the beginning of the year, prices at the gas pump have shot up and led to enormous inflation rates. Consequently, building material prices are skyrocketing as well, and people are becoming even more cautious with their spending habits, eliminating potential consumers from the real estate market.
Additionally, increases in pump prices almost always correspond to a sharp downtick in investment activities, so those looking to make a property investment this year will not be as free to spend as in other years.
There is, however, expected to be a bright spot where lower and middle priced properties are concerned. The higher end properties will continue to suffer, as their values are very unlikely to be lowered, even in the face of economic crisis. However, in light of this, those who could afford higher end properties under different circumstances might be driven to the lower priced alternatives. Additionally, difficulties in obtaining formal government allocations, getting building plans approved, and other government approvals are expected to contribute to driving the real estate boom toward the lower and mid-priced properties.
However, in addition to the inflation and rising prices, there are also some major security concerns to take into consideration, mainly regarding heavy sectarian violence. Additionally, Islamist sect of Boko Haram has been more active, adding to the security concerns. As a result, the President of the Nigerian Institution of Estate Surveyors and Valuers, Bode Adediji, has stated that this state of insecurity across the country could cause a mass migration toward the safer regions, consequently causing rental and house values to crash.
Of course, these are only the predictions and no guarantee of how the year will come to pass. There is some banking activity that indicates a possible bright spot in the coming real estate gloom. Several fringe banks have started to merger, as well as commercial banks. These newer, stronger entities could have the resources to start lending in the real estate sector again this year, according to Chief Kola Akomolede, the President of the International Real Estate Federation of Nigeria.
Post by Mary Johnson from TradeStable.com.ng
