The surge in rental costs is prompting city dwellers to downsize or downgrade to more affordable apartments to stave off harsh economic situation, especially cost of living.
The high rent in the residential segment of the property market has been a fall-out of the inflation trend in the country, currently at 17.71 per cent and attempt by property owners to keep pace with rising prices.
With the inflation, cost of housing, especially imported building materials have gone up due to unfavourable exchange rates on imported building materials. The scenario means fewer people can afford to buy a home, which increases demand for rental housing.
With increased demand and little supply, property owners are fixing higher rental rates as everyone needs a roof over their head and renting is still cheaper than buying property.
The Guardian investigation revealed that rent in major location in cities such as Lagos, Abuja, Port Harcourt and Kaduna, between January 2021 and June 2022, grew by over 50 per cent, while in parts of Lagos, including axis initially considered as cheap, rents range from N700, 000 for two-bedroom and N1 million for three-bedroom.
A three-bedroom apartment that was previously rented at N400, 000 rose to N600, 000, price for two-bedroom increased from N350, 000 to N550, 000 and one bedroom, which was initially N250, 000 jumped to 300,000 in less sought after locations.
Similarly, a mini flat costs about N450, 000 to N750, 000; a two-bedroom flat could be as high as N600, 000 to N1.1million, three-bedroom apartment in highbrow locations of Lagos and Abuja cost between N1.2million to N4 million.
Sharing her experience, Mrs. Kemi Ojuolape, who lived in a two-bedroom apartment in Yaba area of Lagos, where she paid N1.4 million yearly, with her two children had to relocate to a one-bedroom in the same axis to pay N700, 000 after her husband relocated abroad. Others have followed her footstep.
The NIESV’s immediate past chairman, Lagos branch, Mr. Adedotun Bamigbola, confirmed the development. He said what used to be the rent for three-bedroom in Lekki and Lagos Mainland-lkeja and Surulere, is what renters pay for two-bedroom apartment at the moment.
Added to that fact, he said, is the reality that a lot of people are relocating abroad. “I know some people that relocated abroad and it is only the man that is around. After the entire family has left, you don’t expect the man to be occupying a three-bedroom or four-bedroom apartment. He will want to downsize to a two bedroom or in some cases one-bedroom. I understand that has been happening.”
Bamigbola observed that there are also cases of people whose children have travelled to school abroad, stressing that category of families would want to save cost on extra rooms and use it to take care of other pressing needs.
” That is a trend because of the economic situation in the country. If your rent is about N1.2 million for a two-bedroom apartment two years ago, you are probably going to be paying about N2 million or N2. 5 million now.”
Also speaking, an estate surveyor and valuer based in Oyo State, Mr. Alo Fisayo, said the trend could be referred to as the ‘adjustment of one’s pocket’ to cope with the economic reality.
Fisayo, who is the publicity secretary of Oyo branch of NIESV noted that it has always been the trend whenever there is a lull in the economy, adding that most renters do that to get what is needed and effectively allocate available resources to other areas of life.
“Generally, prices of all commodities including building materials are rising and this impacts on property rents and so there is the need for adjustment by most renters. For tenants, there is no way you can control what you don’t produce or supply. The only way to mitigate the situation is through price control of commodities but for tenants the way out is just to keep adjusting.”
The Chairman, Faculty of Estate Agency and Marketing, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Kayode Ogunji, said there is pressure on smaller apartments like self-contain, one-room apartment and two-bedroom as against the demand for three/four bedrooms, duplexes and other big houses.
Ogunji said having bigger apartments nowadays is considered an invitation for unwanted guests, coupled with the fact that people, who have been laid off from work have had to cut their coat, according to their size.
“As a result of that, people now move to smaller units. Secondly, because companies monetise their housing at the beginning of the year and once workers collect the money in bulk, they believe it is a wise economic decision to go to areas such as Mowe, lbafo, Ikorodu, Badagry and outskirts of Lagos-Ibadan Expressway to get land at cheaper rates and develop one or two rooms to live in and continue to develop it gradually. That is why Mondays are always a busy day along that axis with heavy traffic due to people coming to work in the city centres.”
“Two or three of this category of people who don’t have space to sleep in their offices, often come together, rent self-contained apartments. They live there and on Fridays travel to the outskirts to spend the weekend,” he said.
Despite the development, he explained that the situation might not create a lull in demand for larger housing units as the population keeps increasing. The demand for housing, he said, increases, while the stock coming to the market cannot meet the needs of the people.
Ogunji said: “The demand in the market can’t meet the need and that is why in locations like Ebute Metta and Yaba axis of Lagos, two-bedroom go for over N1million now, before you could get it for N350, 000 or N500, 000.
“Rather, people still prefer moving to lkorodu, where they can still get same unit for N300 or N400, 000, not minding the traffic, the wear and tear on their vehicles and their bodies on daily basis.”
On the way forward for housing, Ogunji said access to comfortable and affordably priced homes will still be a mirage until the Federal government is ready to review the Land Use Act, adding that accessibility to land is a major problem in the country.
He said: “For instance, there are some areas within Lagos now, which the government has allocated to people, given them Certificate of Occupancy (C-of-O) but they cannot go to the land because Land grabbers have hijacked the land from them.”
He also expressed concerns over lack of access to housing finance, cost of building materials like sands, iron rods, cement and granite. “It involves a lot of funds going into building development but how many banks are giving loans for building houses? They will rather give loans to someone who wants to import.
“To take out a mortgage for ten or 15 years, no bank is ready for that. Even when they are ready for that, what is the interest rate? The rate is very high and so it is not worth it to take any loan from commercial banks. The Federal Mortgage Bank of Nigeria (FMBN) and others that are supposed to give single digit loans to Nigerians seem not to be in existence anymore. ”