Recession looms in Nigeria’s housing market | The Guardian Nigeria News - Nigeria and World News

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Following the economy’s poor performance in the last few years, Nigeria’s housing market has lurched into recession, with professionals and property developers seeking review of major drivers of the sector.

An index by the National Association of Home Builders found builders’ confidence falling for the eighth straight month; and a report by the National Association of Realtors also found home sales declining for the sixth month in a row in July 2022.

It contributed 5.34 per cent to real GDP in Q1 2022, higher than the 5.28 per cent in the corresponding quarter of 2021. Q2 recorded 4.42per centgrowth and contributed 5.33per cent to real GDP in the period. The percentage change in the average CPI for the 12 months period ending August 2022 over the average of the CPI for the previous 12 months period was 17.07per cent, showing a 0.47per cent increase compared to 16.60per cent recorded in August 2021.

For him, housing recession generally means more sellers than buyers. A recession indicates the inability of homeowners, especially those with mortgages secured their properties to meet those monthly obligations. According to the managing partner, Ubosi Eleh and Company, what drives the Nigerian real estate market today is primarily the huge population giving rise to a lot of demand. “There is also the uneven distribution of infrastructure that forces demand in urban areas and city centres as people struggle to live close to their work locations to limit transportation and commuting costs, as well as have a fair access to basic services and facilities,” he said.

A professor of Estate Management and Environmental Valuation, University of Lagos, Austin Otegbulu, explained that real estate activities operate within an economic environment and are hence susceptible to economic dynamics of booms and bursts. These booms and bursts are consequences of economic and property cycles.

“A major problem of the housing market is that it operates outside the banking sector, and is, somehow isolated from economic shocks. There’s need for government to introduce a healthy mortgage system with single digit lending rate. This will make the housing market more active with respect to demand and supply,” Otegbulu added.

Adelakun said price increases should be expected due to increase in costs and the demand and supply imbalance. “The critical inputs that drive the current real estate market, include access to and cost of titled land, availability and cost of housing finance, supply and prides of housing materials, infrastructure and utilities,”Adelakun said.

 

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