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HOME / News / Column / HOME AND PROPERTIES
Nigerians Hit By Rent Hike As Vacancies Dwindle
Published Mar 15, 2023 IN News, Column, HOME AND PROPERTIES,
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 BY JOSIAH OGOEGBUNEM

 

 THESE are not best of times for renters, as the number of available properties continue to drop by the day and rent surges owing to inflation in the real estate sector.

A factor that has also led to higher mortgage rates and higher home prices, increase in rental rates, devaluation of long-term debt, as well as increase in the cost of construction and distortion in the economy.

Other effects include high cost of funds, as reflected in the exchange rate crisis and high-energy cost. The option for the real estate investors was to hedge against the risks ruling to increase in rent and prices of land and properties.

Consumer Price Index report, recently, released by the National Bureau of Statistics (NBS), shows that the yearly inflation rate in Nigeria accelerated to 21.82 per cent in January 2023, the highest since September 2005, from 21.34 per cent in the prior month, against market expectations of a further slowdown to 21.3 per cent. The main drivers were soaring food prices and a weak naira.

The yearly core inflation rate accelerated for the 10th straight month to a 16-year high of 19.2 per cent in January, up from 18.5 per cent in the prior month. On a monthly basis, consumer prices surged by 1.87 per cent, the most in almost 16 years, after a 1.71 per cent increase in the previous month.

Specifically, inflation has triggered rise in price of building materials, making projects to be delayed and, in other cases, stalled. Developers have also reduced their portfolios, as purchasing powers of Nigerians continue to decrease for them to stay afloat.

There has also been a reduction in vacancies in some cities for certain categories of residential properties and also vacancies in residential properties in prime locations due to design issues, challenge of high-quality finishing and parking challenges.

Most affected are affordable, mid to low-income areas, where we are seeing vacancy rates at a record low within the past five years. The neighbourhoods in mainland Lagos with high demand pressure and low vacancy rates include, Yaba, Surulere and Magodo.

On the Island, a notable trend is that vacancy rates decrease from Ikoyi down to Victoria Island, and along Lekki-Epe Expressway, as houses become more affordable. New leases and rent renewals are more pronounced in units with lower-entry price point.

In Abuja, areas such as Jabi, Wuse, Utako and Gwarimpa are seeing low vacancy rates and developers are already taking advantage with recent increase in residential development going on in these regions.

 

 

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