Lagos and Ogun States, in South-Western Nigeria, have displaced Oyo and Anambra to emerge as states with highest residential property price increases, a new report has shown.

The report entitled, ?Property Price Index Report,? and compiled by ?BuyLetLive,? reveals that the two states recorded highest price increases in 2024 with growth rates of 39.46 percent and 30.48 percent respectively, which are a marked shift from 29.89 percent and 28.24 percent in 2023.

BuyLetLive is an online real estate platform that promotes properties listed for sale, rent, short-let and lease, including apartments. It is an online marketplace that connects people who desire to rent or buy properties with real estate agents, developers and homeowners.

Its new report on the price index covers data from 2021 to 2024 and provides a comprehensive analysis of the real estate market across all sectors in Nigeria, as well as the price growth in various states of the federation.

According to the report, the residential segment of the market emerged as the primary driver of growth, as demand for housing remained strong despite rising property prices and weakened purchasing power caused by rising inflation.

This corroborates an earlier report by Northcourt Real Estate, a firm of estate surveyors and valuers, which is arguably market leader in data generation and market research. The report notes increased development activities, especially in the big cities of Lagos, Abuja, Port Harcourt, among others.

It notes further that developers are emphasising luxury homes, gated communities, and high-rise assets as such assets make sense from returns on investment perspective.

?Urbanisation is a leading driver of demand. The desire for urban living remains strong. This is affecting the evolution of cities ? turning them into hubs of construction activity,? Tayo Odunsi, the company?s chairman, said in the report.

Estate Intel, another online real estate research platform, agrees, pointing out that, over the past 18 months, there has been a surge in residential development starts within Ikoyi, an exclusive destination in Lagos where property sales and rental prices break banks.

Dapo Omidire, Estate Intel?s CEO, revealed that his firm is tracking approximately 1,700 units in the pipeline, noting that many of these projects are slated for completion between 2025 and 2027.

?This growing supply will affect sale prices, rental yields, and the overall competitive environment. We?ve mapped 20 key developments, representing nearly 40 percent of the pipeline, to show their locations and statuses,? he said in a progress note on Monday.

Analysts are however curious that such huge number of development starts is in Lagos, given the number of empty apartments that dot the Ikoyi landscape. Unconfirmed report estimates residential property vacancy rate in Ikoyi at 30 percent.

Providing more insights on the Lagos and Ogun, the BuyLetLive report notes that inflation and rising development costs have pushed property prices higher as developers work to maintain profitability, pointing out that short-let apartments recorded the most notable growth, with prices surging from 12.95 percent in 2023 to 46.40 percent in 2024, reflecting an increase of over 200 per cent.

The report also notes that the residential real estate sector continues to attract more investors than other sectors in Lagos while, over the past year, millennials emerged as the primary demand drivers in the Lagos rental market, with baby boomers dominating sales transactions.

Ogun, according to Gbenga Osowe, BuyLetLive?s chief executive, continues to experience steady growth in industrial development, which bolsters its economic appeal.

The Nigerian National Petroleum Company Limited (NNPCL) is set to commence oil and gas exploration in Ogun, a move poised to attract investment and drive real estate development in the state by creating demand for residential and commercial properties near industrial hubs. Several Lagosians are also moving to Ogun due to the skyrocketing cost of living in Nigeria?s commercial city.

Low purchasing power significantly slowed the real estate market in Ogun in 2023, impacting property prices and reducing overall activity.

Damilohun Oke, BuyLetLive?s Research Analyst, said their report noticed a rise in demand for affordable housing, a trend that materialised as the government initiated the construction of affordable housing projects across various states under the ?Renewed Hope Project.? Despite this positive development, broader economic challenges hindered progress in other areas.

?We anticipated increased funding in the Proptech sector, but the economic instability and declining investor confidence led to a different outcome. Global venture funding fell to $67 billion, representing a 15 per cent decline in value and a 30 per cent reduction in deal volume compared to the same period in 2023.

?A notable shift occurred in the type of housing being sought, reflecting evolving consumer preferences. Domestically, volatility in the exchange rate, fluctuating inflation, and surging fuel prices drove up property costs, slowing activity in Nigeria?s real estate and construction sector. Consequently, the sector?s contribution to GDP,? Oke said. (BusinessDay)

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