For the first time the history of the country, price of properties are on the down ward trend falling as much as ten percent.
Real sector experts attribute this unprecedented turn around in fortunes to the on going banking sector reforms.
Investigations reveal that price of some properties, mostly in the high end of Lagos property market, such as Ikoyi, Victoria Island and Lekki, have had their valuation reduced by about 10 percent, in some cases more, within the past three months.
An estate agent who spoke with Vanguard revealed that some three-bedroom bungalows along the Lagos end of the Lagos Ibadan expressway which was selling for about N15 million some months ago, now goes for about N13 million.
The banking reforms which commenced last year, led to the sacking of eight banksâ€™ chief executives and the executive directors. This culminated into mass retrenchment with about 10,000 bank worker losing their job. The reform also occasioned credit freeze with banks cutting back on loans.Â This real estate developers said resulted into low patronage in the property market as well as decline in price.
Some developers who spoke to Vanguard admitted that the banking reformsÂ Â forced property prices to decline in some areas. They said most of the price fall is due toÂ banksâ€™ debtors sellingÂ off their properties below valuation price to enable them settle their debts and thus avoid prosecution by the Economic and Financial Crimes Commission (EFCC).
A facility manager noted: â€œI think there is a rapid disposal under self_imposed forced sale conditions of property and real estate owned in Nigeria and abroad by the big debtors of many banks in Nigeria. The proceeds of which is being applied toward the prompt amortisation of their loans to avoid prosecution by the EFCC and possible conviction as well as disgrace.â€
He said that with the desperation of some owners of properties who are bank debtors to dispose of their houses, they are forced to offload at lower prices to would-be buyers, who are also taking advantage of the situation, noting however that this is a temporary thing which is not expected to last for too long before the situation returns to normal. He added that in the medium to long term that most banks would be engaged in reviewing their real estate loan profiles.
Some property developers are however certain that the hiccups presently being suffered in the property market as a carry-over of the crisis in the banking sector in 2009 will be over before the end of the second quarter of 2010.
In all of these, it is however interesting to note that rent has continued to sky-rocket in may parts of Lagos, a development which observers have attributed to the simple economic principle of demand and supply, not forgetting the property agents who take advantage of the development to demand outrageous fees.
In some cases, landlords have taken 50 to 100 percent rental price increase on their houses despite complaints by tenants. Often many tenants quit when this happens. But as soon as they quit, new tenants take over the apartment at the new price. That has given some unscrupulous landlords the confidence to take unsubstantiated price increases.
But property experts insisted that the price movements are driven by market forces of demand and supply. â€œDemand is higher than supply in this market. Consequently, property owners take price increases confident that Lagosians will have no choice but to pay,â€ they claimed.