Recent hopes of a rebound in property investors’ sentiment were dashed last week, when an independent organisation’s house prices index suggest that demand is being affected by recession in most of the areas in Abuja and Lagos.
New figures from Roland Igbinoba House Price Index (RI Index) show that in Lagos low-income areas, prices of five bedroom apartments reduced by 16 per cent in the second quarter of 2016 and it further reduced by another 23 per cent at the end of the third quarter, making it about 39 per cent decrease between the first and the third quarter of 2016 and first quarter of 2017.
A house price index by Pison Housing Company serves as a tool that measures changes in single-family home prices across a designated market. The index is a statistic designed to capture changes in the movement of the price residential property in major cities in Nigeria.
In Agege, Lagos for instance, prices of three, four and five bedroom houses fell by 8.6 per cent, 28.6 per cent and 9 per cent respectively between the last quarter of 2016 and the first quarter of 2017.
“These areas are low-income areas where increase in cost of living as a result of hike in price of basic essential commodities putting a strain on disposable income, and reduced the appetite for owning properties,” according to the President, Pison Housing Company, Roland Igbinoba.
Nigeria’s house prices are also rising in Ikoyi and Victoria Island in spite of the recession. These areas are highbrow areas where most buildings are built with imported materials.
Another perspective to the behavior of house prices in these high brow areas is that most of the houses are owned by extremely wealthy individuals who may not be in a rush to sell and thus unwilling to crash their prices even in the face of recession.
Similarly, house prices in Abuja experienced a lot of fluctuations. Prices increased slightly in the first quarter of 2016 while it decreased in the second quarter of 2016 as well as the first quarter of 2017. The recession exacerbated inflation, the price of goods and services skyrocketed. The reduction in the nation’s revenue and foreign exchange resulted in the decline of the value of the Naira against other currencies on the foreign exchange market.
Apart from this, the cost of building materials increased sharply; the cost of cement rose by 40 per cent within 2016. A cursory observation of the constructed indices shows that the highest fluctuation in house prices occurred in Jabi area, for five bedroom houses in the first quarter of 2017 where house price index nose-dived a whooping 58per cent from 112 in the previous quarter to 47 in the first two month of 2017.
There seems to be a steady, albeit marginal increase in the price of houses across all strata in Katampe and Kaura between Q2 2016 and Q1 2017. While in Dakibiyu and Daura areas, the house prices seem to be decreasing across the three stratums throughout Q2 2016 to Q1 2017.
In Garki area, while there seems to be fluctuations in the prices of five bedroom and three bedroom houses, the Indices shows a consistent decrease in the price of four bedroom houses throughout Q2 2016 to Q1 2017.
In Asokoro area, there was a consistent rise in the price of three bedroom and four bedroom houses while the prices of five bedroom houses experienced a gradual decrease through Q2 2016 to Q1 2017. The reverse of this seems to be the case in Lugbe area while in Lokogoma, there appears to be a consistent rise in price of housing across all strata.
Igbinoba said, “the consistent rise in prices of housing in Lokogoma could be due to the movement of demand from the high brow areas like Asokoro and Garki where prices have been on the rise to more affordable areas.”
Executive Director, Nigerian Mortgage Refinance Company, Mr.Kehinde Ogundimu, pointed out that absence of useful data has been a major challenge to government, home seekers and investors in the drive to make decision about the housing market. Chief Executive Officer, Lekki Gardens, Mr. Richard Nyong, welcomed the development, assuring that it will assist developers in their investments.