Property prices rise 20% in Lagos Mainland, drop 25% on Island to close 2015

Lagos property market in 2015 was a tale of two twists, as average asking price on houses saw a sharp increase in the mainland market and the converse on the island market – a market that is highly susceptible to changes in the macro-economy.

The market ended the year with average asking prices rising by 20 percent on the mainland, but fell by as much as 25 percent on the island, leaving a significant vacancy rate estimate at 30 percent by year end at the high end areas of the market.

Residential Auctions Company (RAC) Lagos House Price Index reveals that the average asking price for a 4-bedroom family house on Lagos mainland is now estimated at N73,790,072, while the average asking price for a similar property on Lagos Island is N182,236,111.

“The increase in growth on the mainland does not come as a surprise, as supply of housing units into the market is low and there has been an increased demand for mainland properties from potential house buyers,” Rotimi Akinlose, an official of the company, said.

According to Akinlose, some of the fastest growth areas where asking prices on houses increased over the course of the year included Ogudu GRA, Magodo Phase 2 GRA, Omole, Maryland, Ilupeju and Ikeja due to the lack of suitable housing stock.

“For the Lagos island market, the story was different,” Akinlose stated in their recent 2016 Outlook Report, explaining that the areas with the sharpest fall in asking prices in this market were seen in Victoria Island and Ikoyi where prices dropped by 37 percent and 20 percent, respectively.

“Lekki Phase 1 also saw a decline in prices by 17 percent”, he added, stressing that “this segment of the market is highly vulnerable to factors affecting the macro-economy such as the rapid deterioration of the naira to the dollars and the changes taking place within.”

He noted that with the nation set for another gloomy year and recession looming upon the already fragile economy due to falling global oil price and the weakening naira, the Nigerian economy was in for another tough year, saying that all sectors of the economy would be severely affected, as there would be a high shortage of cash in circulation.

“Our take on this is that although supply of housing units in the market will remain unchanged, there will be less demand from buyers which will ultimately bring a fall not a crash in average asking prices across all markets,” he said.

Analysts say that the free fall of oil prices and the weakness of the naira against the dollar have put the economy in dire straits, putting the entire citizenry under pressure.

Bismarck Rewane, CEO, Financial Derivatives Company Limited, lamented that “this is happening at a time of a crisis of false expectations,” explaining that “citizens had been conned into believing that the economy was in good shape by an outgoing administration that tried to paint an optimistic picture to a miserable electorate.”

Rewane advised that Nigerians should fasten their seat belts in anticipation of the rough tide ahead.