At least 98.5 per cent of Lagos residents live in rented apartments, a new report by BuyLetLive says, with just 1.5 per cent living in their own houses.
With inflationary pressures and consistent rising of the exchange rates in the country, the report stated that residential occupiers in Lagos are predominantly residents interested in renting apartments rather than owning them.
“Our analysis indicates that 98.5 per cent of respondents in Lagos live in rented apartment,” it noted.
“Economic pressures, including high inflation and a volatile exchange rate, have led to an upward trend in property prices in Lagos State, resulting in a surge in demand for rental properties.
“This demand is particularly strong in affordable areas that offer amenities and proximity to workplaces.”
According to the report, the top three residential areas in high demand in Lagos are Yaba, Surulere, and Gbagada.
It stated that despite the increasing demand, the supply of housing in these areas remains insufficient to meet the growing needs.
It puts the current housing deficit in the state to be over 3 million units, adding that this highlights a significant gap between the demand for and supply of residential properties in Lagos.
The report revealed that approximately 43 per cent of respondents in Lagos live in 2-bedroom apartments, with 1- bedroom apartments following closely behind at 41.5 per cent.
To rent a 1- bedroom in Ikoyi costs N6m, Gbagada – N1.5m, Victoria Island – N4m and Ikeja- N1.3m. In Lekki Phase 1, it is N2.5m, Yaba-N1m, Ikate-N1.8m, Ajah-N1, Magodo-N1.5m, and Maryland- N1m
“This trend indicates a strong demand for small to medium-sized apartments, largely driven by single individuals and small families,” the report noted.
In 2021, the Lagos State Government announced plans to implement a monthly rent payment scheme. This was further reiterated by the government in March this year, with its implementation slated for 2025. The report, however, indicated that 62.6 percent still prefer annual rental payments over other payment methods.
“Despite these initiatives in the pipeline, about 62.6 per cent of our Lagos respondents still prefer annual rental payments over other payment methods.
“Amidst this demand for rental properties, 89.6 per cent of respondents intend to own properties in the future. And the Federal Government has actively introduced initiatives, to improve access to affordable housing in the country.
“In May 2024, the Federal Mortgage Bank increased the National Housing Fund (NHF) mortgage limit from N15 million to N50 million. Consequently, the mortgage plan is the most preferred option for property ownership among Lagos residents.
“The rental preferences of respondents in Lagos, indicate a strong demand for affordable housing in the state,” the report said.
Despite the contraction in the real estate and construction sector’s contribution to Nigeria’s GDP in Q1 2024, the report is projecting a slow growth in Lagos in the remaining part of the year.
“The Lagos State residential market is expected to experience slow growth in the remaining part of the year, despite the contraction in the real estate and construction sector’s contribution to Nigeria’s GDP in Q1 2024. The continuous rise in economic instability is causing significant uncertainty, prompting both foreign and domestic investors to adopt a wait-and-see approach due to the uncertainty surrounding the real estate market and the economy at large.
“Despite these challenges, the real estate market remains promising. Population growth and urbanization will continue to drive up demand for residential properties in the state. Although the rising economic uncertainties may impact affordability, demand for affordable housing is likely to remain strong
“The slowdown in construction activities will further constrain the supply of residential properties, increase competition for existing units in the most desired areas, and cause an upward pressure on property prices. Rent growth is likely to slow down compared to previous years, and occupiers might face increased competition for units in areas high in demand
“The ongoing economic uncertainty may push rental occupiers to shift demand towards smaller apartments or shared living spaces,” the report added.
Report Finds 98.5% Lagos Residents Live In Rented Apartments is first published on The Whistler Newspaper