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Housing pros predict rise in property prices, gloomy 2012

Published by Guardian on Mon, 23 Jan 2012

WITH all economic parameters indicating a slowdown and large preponderance of government's recurrent expenditure, construction costs will go up and harden rentals in the housing industry. Similarly, the subsidy removal will trigger inflationary trend, which will impact negatively on house prices and rentals, making it impossible for many people to buy an apartment, according to the 2012 predictions of housing industry experts.But a number of the housing professionals expressed optimism for 2012, after a fairly grim 2011. They expect the housing market to strengthen and property values to defy the wider downturn.Infact, in 2011 there was oversupply of luxury accommodation in prime areas that softened rentals in the sector, while the inability of the nation to curb its security issues eroded investor's confidence. The year was characterised by virtual inactivity in the construction sector, low level of effective demand for houses and tumbling of property values and rental prices especially in the frontline cities of Lagos, Abuja and PortHarcout.Surprisingly, the rumpus in the banking sector continued to impact negatively on the real estate market. Property developers could not access funds for development while would-be house owners also did not have access to mortgages.According to London-based real estate firm, Knight Frank's report released recently, prime global city markets in 2012 are likely to outperform their mainstream national counterparts, saying, 'don't expect all prime residential markets to deliver positive growth.The forecast concentrates on the prime residential markets in the world's leading cities, and highlights how growing global uncertainty and government intervention in the property market, especially in Asia, will weigh on prices in some areas. But some cities, such as Moscow and Bangkok, will shrug off these concerns to register growth of between 10 and 20 per cent in 2012. Paris, Kiev and St Petersburg are all expected to rise by five to 10per cent, with London slotting in next with a rise of five per cent. But prices in Shanghai, Mumbai, Manama, Hong Kong and Geneva are tipped to fall by between 10 and 20per cent.The Guardian's survey shows that estate surveyors expect a greater opportunities for real estate in the middle to low income sector where demand greatly outstrips supply during 2012 than for attached units, a category that includes townhouses and condominium apartments. 'The cost of developing houses and property will escalate while at the same time the purchasing power of the populace may crash to the lowest ebb in recent history,' says Mr. Bode Adediji, President, Nigerian Institution of Estate Surveyors and Valuers (NIESV).He also sees the nation withnessing mass exodus of people from certain security-prone areas to more secure cities with it obvious attendant implications especially on residential houses. Adediji argued that house values and rentals will continue to crash in some regions while the same factor will push up the demand and prices in destination locations.The President, Association of Professional Bodies of Nigeria (APBN), Mr. Segun Ajanlekoko, also agreed with Adediji's assessment of the rental market: 'The real estate is universal and dependent on the behest of government fiscal policy. With large preponderance of recuurent expenditure very little can be expected on the sector.'Government should create the necessary enabling environment that will ensure influx of private sector funds and direct foreign investments to boost the construction industry and promote indigenous manpower,' he saidFor Dr. Femi Olomola, Second Vice President, Nigerian Institute of Town Planners (NITP), there is no reason to be optimistic in 2012 as some of the factors hampering the housing industry are still much around, as 'cement price is still high and getting a formal government allocation of a plot of land is like climbing Mount Kilimanjaro. Securing a title to land is via paying punitive government charges on Governor's consent/regularisation/Certificate of occupancy. Getting building plan approval is via a rather tortuous route lined with exorbitant and investment-unfriendly government charges.'Brighter days seem to lay ahead, President, the International Real Estate Federation (FIABCI), Nigeria, Chief Kola Akomolede forcasts. 'It is expected that with the merger of fringe banks and take over of some by the Central Bank of Nigeria (CBN), many banks will be able to resume lending to the real estate sector this year.'Akomodede, NIESV's Chairman, Faculty of Housing, added, 'last year, many politicians did not play in the real estate sector because it was an election year which required huge expenses. It is expected that they will resume their investments in property this year from their largesse of office. This again may stimulate demand and propel higher prices.'A principal partner at the estate surveying firm of Ubosi Eleh and Company, Mr. Chudi Ubosi, concurred. 'There is a gradual climb out of the depressed state of 2011 and this very gradual climb upwards will continue signaling a positive outlook for property and related transactions. The greatest opportunities for real estate lie in the middle to low income sector where demand greatly outstrips supply.
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