Now good time for first homebuyers in Nigeria, UK as economy slows

Now is good time to move cash to both Nigerian and London property markets as the once burgeoning Nigerian property market, like the seemingly ever robust London property market, has cooled, offering ample time and good opportunity for home buyers and investors, BusinessDay checks reveal.

Whereas, the London market has succumbed to several market forces, including government’s stamp duty measures over the last 18 months, and the withdrawal of many foreign buyers experiencing their own domestic woes, the Nigerian market is struggling from the combined impact of the country’s slowing economy and the government’s anti-graft war.

The current market situation in London is quite intriguing and Onyx Real Estate, London-based property consultants, explains that in his Summer Budget and Autumn Statement of 2015, and the March Budget in 2016, the Chancellor introduced several new laws targeting property investors and second homeowners.

These laws include the abolishment of mortgage rate relief when calculating the taxable rental income (in effect from 2020), a reform of the wear and tear allowance, and a Stamp Duty Land Tax (SDLT) rate – 3 percent above current rates – that now applies to all second homeowners.

In Nigeria, government’s fiscal and monetary policies have more or less squeezed money out of the economy and this, coupled with the fall in oil price at the international market, has considerably reduced demand for property by both households and companies.

Onyx notes that while there was a rush to buy in the first few months of the year as investors took their “last chance” to buy before the new rates of SDLT hit on April 1, sales transactions jumped by 50 per cent in March, but have halved since April, and since that time, SDLT for a second home worth £275,000 has risen from £3,750 to £12,000.

In Nigeria, close market watchers say it is a buyer’s market that will take a long time to end, explaining that the challenge in the market is not going to go away any time soon and “going by my projection, I don’t see the market getting a rebound any time before the end of next year,” Ogini Ojeme, an estate manager and property consultant, says.

According to Ojeme, those who want to buy must buy now because after now, properties are going to be expensive and this is because supply is already shrinking as not many people are building.

Chudi Ubosi, Africa president of the International Real Estate Federation (FIABCI), advises that those who want to buy should go for foreclosed properties “because they make more economic sense.”

“Fear of Brexit has certainly curtailed many buyers, particularly those abroad, from purchasing property from the UK market as uncertainty looms regarding what life outside the EU will look like. However, there is an advantage to those foreign buyers, if they were to buy now,” Onyx advises.

Outside the EU, the company notes, the UK could become even more attractive in its exclusivity, while continuing to offer the unique culture, an excellent education, and legal system stability that currently makes it so appealing.