RECESSION: Estate agents lament drop in prices of property

A Housing estate used to illustrate the story
A Housing estate used to illustrate the story

Estate agents have decried the drop in the price of landed property across Nigeria as a result of the economic recession plaguing the country.

Some agents and developers who spoke with PREMIUM TIMES said that the property market was seriously affected by the economic downturn, leading to huge drop in the prices being offered by potential buyers.

Seyi Sodiya, a Lagos-based estate developer, said there is a lull in the market also because the cost of production has increased.

He said even though people still build houses and buy property, production cost has doubled while the cost of workmanship has remained stable. He however expressed optimism that the market situation will change in the first quarter of this year.

“Yes, people are still buying property, building houses and carrying out projects but the cost of construction has doubled in some cases.

“The only thing that has been stable a bit is the labour wages. We hope that the momentum will improve in the first quarter of 2017,” he said.

Mr. Sodiya, however, described the economic recession period as the ‘choice’ time for buyers to bid for property, stressing that many property owners dispose their asset at lower prices at the time.

He explained that the crisis of foreign exchange and the fluctuating rate of the Naira had no impact on the prices of property last year, adding that it was largely because there was not much foreign direct investment, FDI.

“I believe now is the period (to buy property) if the price and location is right because a lot of property owners are disposing some property to offset debts, execute projects and have ready liquid cash.
“As per the exchange rate, there wasn’t any serious effect. Not really, especially if you look at it from the angle that we did not have much foreign direct investment, FDI,” Mr. Sodiya said.

He lamented that there were few buyers for the numerous property being put up for sale.

MANY SELLERS, FEW BUYERS

For Gideon Ele, a Port Harcourt-based estate agent, the property market in Nigeria today is flooded by numerous sellers and few or no corresponding buyers.

In a chat with PREMIUM TIMES, Mr. Ele explained that the disparity in the demand and supply rates is the cause of reduction in prices because buyers are only willing to pay less for properties.

“Most residential and commercial properties are all up for consumption; either to let or for sale. But there is no purchasing power to go after them. Of course, this has drastically reduced the prices of properties in the market.”

Mr. Ele said that this reduction in the purchasing power of buyers has forced many desperate property owners to put prices below the average worth of the properties.

“Let me give an example: there is a detached six bedroom duplex somewhere here at the Government Residential Area, GRA, in Port Harcourt. On a normal day, the house should go for between N5 million and N6 million because of its GRA location and its interior finishing. But the landlady slashed it to N3.5 million per annum yet she has not got anyone to take it.

“In fact, the lady keeps begging me every day to get a tenant to rent the place and with her level of desperation, if anyone offers her anything below that N3.5 million price, she will hurriedly grab it. This is the reality of the market.”

A civil servant at the Federal Ministry of Health, Abuja, who declined to have his name in print, also explained that the poor situation of things is why there are many unoccupied buildings in some parts of the city. She explained further that many politicians and government officials are being forced to put up their property for sale at ridiculous prices.

For Azeez Okanlawon, an estate agent at Sango-Otta, Ogun state, cost
of property has not really decreased, even though it has failed to move up. He attributed the constant rate of property in the area to the influx of residents from Lagos city centre.

“Cost of property, whether for rent or outright sales, has not reduced around here. Many people are moving into this area from Lagos and environs. But it has not really increased, either; perhaps due to the recession. You can still get a single room apartment here at N90,000.

“A nice 3-bedroom flat still hovers around N200,000 to N350,000, depending on the quality of the building and facilities available,” he told PREMIUM TIMES.

Thompson Olowookere, an estate agent based in Ilorin, said owners of property are putting them up for sale at this period. He also complained of low patronage as there are very few buyers. While expressing hope that the situation would improve in the new year, Mr. Olowookere said it has not been easy surviving as an estate agent in the period of recession.

“It has not really been easy surviving as an (estate) agent. There are too many properties for sale and virtually no buyer; even though I tell people often that this period is the best time to acquire property.

“For instance, a property worth N5 million now goes for N3.2 million or even less. Yet, no one is buying them.”

WAY OUT

Commenting on the way out, Mr. Ele said that the government needs to design a blueprint that will take the nation out of economic recession. He also said that the government should develop means of making money circulate among Nigerians, adding that loots recovered from corrupt politicians should be injected into the system.

“The onus lies on the government to be responsible. It should let Nigerians know our destination as a country from how the 2017 budget is implemented. Recovered loots need to be injected into the system too.”

On his part, Mr. Olowookere urged “the Buhari government to pump money into the system and let it circulate among Nigerians.”

A resident of Surulere area of Lagos, Lukmon Lasisi, however said that activities of the estate agents also need to be checked.

Mr. Lasisi explained that due to the shenanigans of estate agents, most properties are put up for sale at prices beyond the reach of many buyers, adding that it is the reason why many properties are avoided for a long period of time by potential buyers.

“The agents need to be checked, they are the cause of most problems associated with property rent and sales in Lagos here,” he said.


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