The surge in rental values is putting enormous pressures on higher mortgages rates, housing insurance plans, an increase in rental rate, devaluation of long-term debt, as well as an increase in the cost of construction and distortion in the economy, NATIONAL ECONOMY learnt.
The precarious state of rental surge is distorting the housing market and affordability to rent decent homes as stakeholders in the real estate sector have expressed the need for the government to synergize with the private sector and sundry players in the industry to stem the tide of housing crisis in the country.
The real estate rental segment is grappling with gallop and rent inflation, such that, the precarious state of the property market sector is rising in astronomical proportion.
Sundry players in the property market sector believes that the recent surge in rental value is triggered by forces of supplyside inflation, volatility of Fx market, economic disruptions, fiscal economic policy, debt burdens, high inflationary environment amongst other macro-economic shocks leading to price inflation.
Obviously, the housing sector is gripped with high cost of building reinforcements, hyperinflation, and cost of importation such that rental cost of urban housing area has reached crisis levels, thereby, forcing many young and promising Nigerians to live in rural parts.
Similarly, rents have increased by about 75 per cent in densely populated cities like Lagos, Abuja, and Port Harcourt, where the hike has risen to about 50 per cent in certain locations in the last three years. For example, a duplex of four-bedrooms that was let out for N4million to 4.5million are now going for between N6million and 7million yearly.
Other locations, especially, the high-density residential segments within the hinterlands in Lagos, have also witnessed almost double in the last three years.
For example, in Lagos, a three-bedroom apartment in Yaba with great demand has seen rental growth as high as 60 per cent within the last two years. High-end neighborhoods have enjoyed similar rental growths, but over a longer period.
Rental prices in Yaba, Surulere, Oyingbo,: Three-bedroom (N2.1m); four-bedroom (N3.4million); Surulere: three-bedroom (N2.2m); four-Bedroom (N3.5m); Gbagada: three-bedroom (N2.5m) and four-bedroom (N3.2m); Ikeja GRA: three-bedroom(N5.8m) and four-bedroom(N8.9m).
In Magodo GRA: three-bedroom (N2.6m) and four-bedroom (N4.5m); Festac: three-bedroom (2.3m) and four-bedroom (N3.3m); Apapa: three-bedroom (N2m) and four-bedroom (N4m); Lekki Phase 1: three-bedroom (N4.6m) and four-bedroom (N5.5m).
Similarly, in Ikoyi: three-bedroom (N13m) and four-bedroom (N15m); Banana Island: three-bedroom (N15m) and four-bedroom (N19.5m); Victoria Island: three-bedroom (N6m) and four-bedroom (N8.5m).
Estate surveyors and valuers, including property developers, who confirmed the development, traced the situation to market forces of demand and supply, as well as a decline in the vacancy rate.
One of the commentators who spoke on the condition of anonymity said it is the responsibility of governments to provide housing for the poor and vulnerable people who have special needs.
A past president, International Real Estate Federation, (FIABCI) Nigeria, Chief Kola Akomolede, who agreed that rents have increased across the board in the major cities, particularly, in Lagos, said it was owing to inflation derived from the devaluation of the Naira.
“Supply has also been reduced as a result of the high cost of construction of new houses. Vacancies have reduced because of the reduction in supply and not many are changing houses due to higher costs,” he said.
According to Akomolede, property developers are still building houses but the quantity has reduced drastically due to high costs of land, building materials, and finance.
A past chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Sam Eboigbe, said since the global economic meltdown impacted prices of goods and services, the property market will not enjoy immunity from the effects.
However, he said rent hike is not applicable to the whole gamut of residential properties, “we have, nevertheless, in some instances witnessed stability and reduction in the price adjustment in low-density housing types.
“Conversely, the medium and high density housing segment located within the hinterlands have witnessed extremely upward adjustments in the rental levels in the post-COVID-19.
“Requests for residential property listings post COVID have remained on a steady increase, while demand for the retail side has been experiencing decline.”
Eboigbe blamed it on the interest rate that has been all-time high, which has a cumulative effect on hampering access to credit, adding that most finished products in the marketplace have ongoing mortgage repayments.
The effect of the exchange rate is that transactions can be frustrated due to the effect of the unstable naira. The rising interest rate has not also encouraged stakeholders in this sector
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