A report by BuyLetLive has revealed that economic uncertainty may push renters to live in shared spaces.
It disclosed, “The Lagos State residential market is expected to experience slow growth in the remaining part of the year, despite the contraction in the real estate and construction sector’s contribution to Nigeria’s GDP in Q1 2024.
The continuous rise in economic instability is causing significant uncertainty, prompting both foreign and domestic investors to adopt a wait-and-see approach due to the uncertainty surrounding the real estate market and the economy at large.
“Despite these challenges, the real estate market remains promising. Population growth and urbanisation will continue to drive up demand for residential properties in the state. Although the rising economic uncertainties may impact affordability, demand for affordable housing is likely to remain strong. The slowdown in construction activities will further constrain the supply of residential properties, increase competition for existing units in the most desired areas, and cause upward pressure on property prices.
Rent growth is likely to slow down compared to previous years, and occupiers might face increased competition for units in areas high in demand.
“The ongoing economic uncertainty may push rental occupiers to shift demand towards smaller apartments or shared living spaces. The government will play a significant role in driving the growth of the residential market through the introduction of policies that favour real estate development, particularly in the residential sector. Overall, while challenges persist, the fundamental demand for residential properties in Lagos remains resilient.”
On property and rental preference analysis, the report noted that approximately 43 per cent of respondents in Lagos live in 2-bedroom apartments, with 1-bedroom apartments following closely behind at 41.5 per cent.
It stated, “This trend indicates a strong demand for small to medium-sized apartments, largely driven by single individuals and small families. Our analysis reveals that the highest rental payments fall within N500,000 to N1 million per annum. This price range aligns with the income distribution among respondents, which is between the N100,000 to N500,000 monthly income bracket.
“In 2021, the Lagos State Government initially announced plans to implement a monthly rent payment scheme. The government further reiterated these plans in March this year, with its implementation slated for 2025. Despite these initiatives in the pipeline, about 62.6 per cent of our Lagos respondents still prefer annual rental payments over other payment methods.
“Amidst this demand for rental properties, 89.6 per cent of respondents intend to own properties in the future. And the federal government has actively introduced initiatives to improve access to affordable housing in the country. In May 2024, the Federal Mortgage Bank increased the National Housing Fund mortgage limit from N15m to N50m. Consequently, the mortgage plan is the most preferred option for property ownership among Lagos residents. The rental preferences of respondents in Lagos indicate a strong demand for affordable housing in the state.”