Nigeria: Housing shortage worsens as rental values skyrocket

Zawya

27-01-2025

This is not the best time for tenants and accommodation seekers as rents for new houses in urban centers such as Lagos and Abuja have gone up by about 300 percent.
Despite the surge in rental costs, most Nigerians seeking accommodation are more than the available houses, giving room for the highest bidders to have their way.
To worsen the situation, estate agents are now taking advantage of the accommodation shortage to charge excessive fees for commission, agreement, damages and service charge.
Nigerian Tribune's findings showed that many Nigerians, seeking accommodation were not finding this easy coupled with the economic hardship in the country.
Most tenants are currently at the mercy of their landlords, while those that cannot afford the high rental cost are relocating to the interior parts of the cities.
In Lagos for example, especially in locations like Victoria Island, Lekki, Surulere, Ikeja GRA and Magodo, rental values for newly built one-bedroom apartments range between N1.5 million and N3.5 million per annum compared to N600,000 and N1.2 million in January 2024.
Besides, rents for two-bedroom apartment cost between N5million and N9million, depending on the level of finishing and facilities, while that of 3-bedroom apartments cost between N5million and N14 million
However, it has been discovered that two-bedroom apartments, which are limited in circulation, are in hot demand in these locations.
For home seekers that cannot afford the high rental costs, they moved to the interior locations like Ayobo, Mowe-Ofada, Ibeju, Ikorodu and Igando, not minding the high transportation cost they will have to pay to their workplaces.
Findings from Nigerian Property Center, an online search platform, showed that in locations such Wuse2, Asokoro, CBD, Gwarinpa in Abuja, rental costs of one-bedroom apartment range from N2.5 million to N13 million, depending on size and features.
One of the estate agents that spoke with our correspondent in Lagos, Alhaji Sunday Agbabiaka, said that rents were no longer cheap in the interior locations due to overpopulation.
He said the demand for accommodation in these enclaves has overwhelmed supply in the market.
According to Agbabiaka, huge demand for accommodation and high cost of living have made most landlords in the suburbs to jack up house rents.
'People that are looking for houses in these interior locations are more than the available houses. Therefore, most landlords seized the opportunity and increase rents.
'You can imagine about 10 accommodation seekers competing for a three-bedroom, and the landlord will stylishly increase the rent. At least, one person will pay,' he said.
According to Agbabiaka, house rents in Ipaja, Ayobo and Alimosho have hit 200 percent increase in one year.
He added that many people that couldn't afford high rents in Surulere and Yaba are moving to Ipaja, Ayobo, Ayetoro and Atan in Ogun State.
A landlord in Ikeja, who did not want his name in print, blamed the situation on high cost of building materials.
According to him, going by the nation's current inflation trend, landlords would want to leverage on proceeds from their property for survival.
Real estate experts that spoke with Nigerian Tribune confirmed that rents in both Lagos and Abuja have been increased by 300 percent in the last one year.
They expressed that the current house rent crisis in Nigeria would demands immediate and decisive action from the government.
By addressing the root causes of the crisis, particularly the impact of fuel price hikes, and investing in sustainable transportation solutions, they are of the opinion that the government can alleviate the burden on Nigerian citizens and ensure a more equitable and prosperous future for all.
Lagos-based estate surveyor and valuer, Mr. Olufemi Oyedele, said that, in some parts of Lagos State, most landlords have increased their rent by almost 300 percent, especially in new residential properties at Victoria Island, Surulere, Ikeja GRA and Ikoyi.
'This is due to two factors. One, the demand for houses is higher than the supply as Nigeria housing deficit is still close to 20 million units. Secondly, the high cost of new houses is exorbitant because of the high cost of building materials,' he said.
He pointed out that the fact that 'there are rent defaulters means that the rents are not affordable.'
In the midst of this, the real estate expert said that a lot of completed vacant properties adorned the environment due to lack of law to guide against abandoned buildings.
'There is no law in Nigeria to guide against abandoned properties. If there is heavy taxation against abandoned properties, market dynamics will reign,' Oyedele said.
Abuja-based estate surveying and valuation practitioner, Mr. Osilama E. Osilama, said the rental market across Nigeria, particularly in major urban centers like Abuja, has been experiencing a dramatic and unprecedented surge in prices.
Over the past one year, he confirmed that rental costs have skyrocketed by over 300 percent for both newly constructed and older properties.
'This steep increase impacts on all housing units, regardless of location, with properties in affluent neighborhoods like Maitama, Jabi, Asokoro, Guzape suffering the most significant price hikes,' he said.
He traced the root causes of high rental costs to a number of factors, ranging from a failing economy to ill-conceived policies.
Osilama argued that the housing crisis was a direct consequence of a series of ill-advised economic policies implemented by the Federal Government.
The most significant contributor, he said was the Premium Motor Spirit (PMS) price hike, which, according to him, has had a devastating ripple effect across all sectors of the economy.
He said: 'Increased fuel prices dramatically increased transportation costs for both people and goods, impacting every aspect of daily life.
'This includes increased commuting costs, making it more expensive for workers to reach their workplaces; higher food prices due to increased transportation costs for farmers and distributors; and increased production costs for businesses across all sectors, leading to higher prices for goods and services.
'Inflationary pressures: The surge in transportation costs even building materials are not speared. It has fueled a wave of inflation, eroding the purchasing power of Nigerians and significantly impacting their ability to afford housing.'
He was of the opinion that government's inaction exacerbates the crisis
According to him, government's response to the economic crisis had been inadequate.
'The abrupt removal of fuel subsidies without a comprehensive plan to mitigate the impact on the most vulnerable segments of society has exacerbated the suffering of ordinary Nigerians since then,' he said.
On way out, the real estate expert urged the federal government to re-evaluate fuel subsidy removal.
'Implement a gradual and phased approach to fuel subsidy removal, allowing the market to adjust and minimizing the immediate impact on citizens,' he said
He wants government to invest in public transportation by allocate a significant portion of the budget previously earmarked for the ongoing and 'ineffective' poverty alleviation programmes (direct cash transfers and rice distribution) towards a robust public transportation system.
Osilama said: 'Specifically, invest in the procurement of 200-350 units of high-quality, fuel-efficient buses for each state.
'These buses should be strategically distributed across all local government areas, ensuring equitable access to affordable and reliable transportation for all citizens.
'Address the underlying economic issues: Implement sound economic policies that promote sustainable growth, create jobs, and improve the overall economic well-being of Nigerians,' he said.