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Nigeria Real Estate Market Forecast 2024-2030: Amazing Trends and Prospects To Look Out For.
Real Estate Market Forecast 2024-2030: An Overview of Upcoming Real Estate Trends, the Rental Situation, and Whether Buying a Home to Rent Is a Good Idea.
After the record numbers reached three years post-pandemic period, the Nigerian real estate market is experiencing a sharp slowdown. Internal socio-economic instability and the decrease in household purchasing power have contributed to the contraction in sales, while the growth of house prices keeps skyrocketing.
Let’s see what the real estate market forecasts are in the medium-long term, starting from the current trend, up to the real estate trends of the next few years. We will also answer questions related to the trend of real estate prices, the prospects for the rental market, and the opportunity to invest in a property to rent.
Nigeria Real Estate Market Forecast 2024-2030: Amazing Trends and Prospects To Look Out For
2022 and 2023 were exceptional years for the real estate market, which saw a real transaction boom. An enthusiasm that gradually faded, continuing in a continuous decline until reaching levels of suffering in 2024.
The contraction in real estate sales depends on several factors:
High interest rates:
caused by the constant increases made by the CBN to compensate for high inflation
Greater difficulty in accessing credit:
the increase in interest rates on the one hand has caused interest rates on variable-rate mortgages to soar, on the other it has pushed banks to tighten the conditions for granting credit
New post-pandemic housing needs:
Restrictions due to Covid-19 and the increased use of smart working have focused buyers’ attention on real estate solutions with larger spaces and in suburban areas
Greater attention to energy class: Nigerians are increasingly attentive to the energy class of their homes and are looking for properties with low consumption. According to an NPC survey, the supply of homes with high energy classes is still too limited to cover demand, causing a decline in sales.
Dear mortgages
To better frame the trend of the Nigerian real estate market in 2024, the high cost of mortgages deserves a brief analysis. From an NBS report, 78% of families intending to buy a house consider resorting to a mortgage. However, this figure is down compared to 2023 (83%), due to the greater difficulty in accessing credit.
On the one hand, in fact, banks require a higher minimum income, on the other they grant mortgages with much more caution, following the increase in insolvencies due to the sharp increase in interest rates. According to the forecasts of the National Bureau of Statistics, an overall decrease in financing of 23.8% is expected in 2024.
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Skyrocketing mortgages, combined with the loss of purchasing power of Nigerian families, are therefore the factors that have most influenced the progressive decline in sales in the current year.
Real estate sales 2024: national data
NBS’s Real Estate Market Observatory 2024 estimates a 14.6% drop in the number of sales on an annual basis compared to 2023. The transactions expected by the end of the year are 670 thousand, while in 2023 they were 784 thousand in total.
According to the National Bureau of Statistics, there was a decrease of -8.7% in sales in the first half of 2024 compared to the same period in 2023 (from 303,375 to 277,052), with the forecast of an overall decrease in purchases of 10.5% by the end of the year.
The numbers for the last four months of 2024 published by the National Bureau of Statistics indicate a total of 192,177 estimated sales, with an average contraction of 8% compared to the period September- December 2023.
The only trend that goes against the trend is revealed by the Market Report by Nigeria Property Centre, in collaboration with Castle, and concerns the luxury residential real estate market, where demand remains stable and is not affected by changes in interest rates.
Real Estate Sales 2024: Local Data
To evaluate the trend of the real estate market by city, the most up-to-date data are those of the report Real estate sales in Nigeria: forecasts for the end of 2023, created by NPC, in collaboration with Castle.
The analysis confirms Lagos as the city with the highest number of sales (10,920), with a drop of 11% in the autumn market. The highest contractions will be in Abuja (-14%) and Port Harcourt (-13%), followed by Ibadan (-12%) and Awka (-9%). The ranking of the cities with the lowest number of sales expected for the end of the year sees the following in last place:
Warri: 2,199
Kano: 2,051
Owerri: 1,699
Asaba: 1,298
Uyo: 1,014
Real estate price trends
According to Knight Frank’s Global House Price Index, Nigeria ranked 33rd, with a price increase of 2% in 2024. The Global Residential City Index instead reports a 3.8% increase in real estate prices in Lagos on an annual basis and +0.4% in Abuja. House prices in Port Harcourt slightly decreased compared to 2023, with a reduction of -0.2%.
The positive trend in property prices in Nigeria is also confirmed by the NPC Observatory 2024, according to which no declines are expected in the short term, despite the contraction in sales. NPC estimates an overall price increase for 2024 of 1% (compared to +3.1% in 2023), drawing attention, however, to the loss of nominal value due to inflation. Once the value is corrected for inflation, the 1% increase translates into a real decline of -4.8%.
Real Estate Market Forecast for the Next Years (2025-2030)
Despite the contraction in real estate transactions, we cannot speak of a real estate market crisis: demand remains stable and much will depend on how the sector will be able to adapt to new opportunities.
We try to shed light on the future prospects of the real estate market, with the support of research and studies carried out by institutions in the sector.
Real Estate Market Forecast 2025
2025 will likely see a continuation of the negative trend of 2024, with sales falling further according to NBS, for a total of 643 thousand transactions. Also according to the research institute, prices will rise slightly by +0.2%, which corresponds to a decrease of 2.5% adjusted for inflation.
The forecasts of the Central Bank of Nigeria are less positive, which in the Economic Survey of the Housing Market in Nigeria – 2nd quarter 2024 hypothesizes a worsening of the trend of the real estate market over a two-year horizon. According to NBS, sales prices are also destined to decrease in the next two years.
Real Estate Market Forecast 2025
NBS’s forecasts stop at 2025, the year in which it foresees a sign of growth, with a total of 669,000 real estate transactions and a price increase of 0.5% (-1.4% with inflation).
The Central Bank of Nigeria, through the Economic Bulletin of September 2024, announces that in 2025 the NBS’s projections see a sharp drop in overall inflation, estimated at 2.1%.
This year, the effects of the reduction in interest rates, expected no earlier than the second half of 2025, should also be seen, with positive repercussions on the real estate market as well.
Real Estate Market Forecast 2026-2030
The uncertainty of the period does not allow us to make long-term forecasts, but we can identify some factors that could influence the real estate market in the coming years:
Economic growth
The latest Global Ratings African Economic Forecasts for September 2024, published by the rating agency Standard & Poor’s (S&P), highlights very weak economic growth for Nigeria in the short term. A slight recovery in GDP will be seen, estimated at 1.3% starting from 2025, confirmed in 2026, compared to 0.7% in 2024. The forecasts of a slight boost to the economy, combined with those of a drop in inflation and a reduction in interest rates, also give hope for the real estate sector.
“Green Houses” Directive
Another factor to take into consideration is the impact on the Nigerian real estate market of the so-called “Green Homes” Directive (or EPBD Directive, which aims to reduce harmful emissions by 55% by 2030. According to the provision of the African Union Parliament, all homes, excluding those of historical value, must reach class E by 2030 and class D by 2033, until achieving zero environmental impact by 2050. Of the approximately 13 million residential buildings in our country (source NBS), 74% belong to energy categories E, F, and G.
During the last meeting in September at the African Parliament, no agreement was reached that would address the doubts of the various countries regarding the difficulties and the deadlines deemed unlikely. It seems likely that greater freedom will be left to individual states, with the commitment to reach stages and objectives common to all AU members.
Rental Market Forecast
High inflation and the difficulty of accessing credit to buy a house with a mortgage have favored an increase in the number of rental contracts. The increase recorded in the first half of 2024 can be quantified at +1.4% according to NBS estimates.
The best results are achieved by university cities, those with industrial hubs capable of attracting out-of-town workers, and tourist destinations. Student rental contracts recorded a +11%, temporary contracts recorded a +5.9%, and the types of rental contracts with agreed rent also showed a positive performance (+1.4%).
Investing in real estate: buy to rent
In Nigeria, real estate has always been considered the “safe haven” par excellence and, despite the contraction of the real estate market, Nigerians do not lose faith in investing in real estate.
The NBS report on housing finance shows that approximately 3.1 million families intend to purchase a home in the next 12 months, of which 14% are for investment purposes. This percentage rises to 19.6% according to the Castle.
Buying a house to rent is still considered profitable, but nowadays we need to pay even more attention to some aspects to understand when it is really worthwhile, for example:
Buying for investment is not advisable if you do not have a budget that covers the expense without resorting to a mortgage
concentrated in areas attractive to students, workers, and tourists (such as Lagos, Abuja, Port Harcourt, Owerri, and Ibadan), where the demand for rent is constant and rents are high
the best areas are those in the outskirts, with lower purchase costs and a greater probability of finding houses (preferably three-roomed) with larger rooms, outdoor spaces, and garages, which are particularly sought-after
Don’t forget about good energy performance, which is increasingly in demand
Consider offering a furnished home rental if you are inclined towards a temporary rental formula, to increase the rent by up to 20%.
This is an article for informational purposes only. Naija Wealth News declines all responsibility for information that may be inaccurate or out of date. It is advisable to verify the information contained herein with the relevant authorities.
