An image of residential buildings used to illustrate the report. Source: Pixabay
A real estate market analyst and the Chief Executive Officer of NorthCourt, a real estate advisory firm, Ayo Ibaru, has said the value of houses and rent would continue to rise, as growing population is expanding demand for housing in Nigeria.
Ibaru disclosed this on Tuesday, December 2, while commenting on the gross domestic product growth of 3.98 per cent released by the National Bureau of Statistics (NBS).
Analysing market trends in the housing sector, Ibaru highlighted a supply-demand imbalance, noting that it had become a norm in the sector despite housing policy initiatives of the government.
Nigeria’s housing sector is experiencing significant growth, driven rapidly by increasing population and urbanisation. The real estate market is projected to reach $1.5 trillion by 2025, with a housing deficit of 17-20 million units.
The expert explained that with the annual population growth of 2.5 per cent, the demand for houses would grow, which would also lead to an increase in rent since affordable housing remained elusive.
“Quarter three has seen lots of infrastructure projects, comprising Lagos-Calabar expressway and other major constructions across the country, which have elevated construction activities in the country,” Ibaru said.
He also noted that there were more opportunities in real estate, adding that 2026, being a pre-election year, would become the toast of local investors who understand the market.
“Construction work will continue as the pre-election year always favours the local investors who understand the risk appetite of the market, he said.
He stressed further that the demand side of the housing deficit must be supported by the government with incentives for investors to improve availability and affordability.
“On the demand side, we expect financing, and people cannot afford high rent. Also, the government should focus on creating more transparent products in housing that could attract long-term investment.
“On the supply side, it’s a bit tricky. What goes to the housing sector is imported. There’s the importation, inflation and currency problem which also affects the market.
“There’s also the Land Use Act concerns and the need to update our land surveys across the country, in addition to bureaucratic inefficiencies in many ministries of land. You come with all your paperwork, and the process takes time,” he added.
The ICIR reports that registering a property in Nigeria typically takes one to three months although bureaucratic delays can extend this time frame. In contrast, Rwanda boasts one of Africa’s fastest business registration systems, with property registration possible within six to 48 hours.
“If I cannot predict when the state will grant me access to develop, then there’s a problem. If I go ahead to develop, there are more problems of illegality. This complicates investors’ appetite for Nigeria’s housing sector.
“I expect construction to go up by 5.6 per cent in the second quarter of next year, with many state governments also keying into infrastructural projects,” Ibaru disclosed further.
Many middle-income earners are still struggling to access affordable homes because of lack of funds, rising inflation, and the weakening of the naira.
Although the Nigerian government has rolled out some policies, checks by The ICIR show that inflation, inefficient data, lack of local manufacturing hubs, and high interest rates are some of the issues affecting affordable housing for intending homeowners.