Housing bubble Lagos Nigeria - Some people think Lagos Nigeria real estate is at its peak in terms of real estate prices or home values. They think that real estate bubble is building in Lagos and that sooner or later, the bubble will burst and property prices will come crashing down.
Those who hold the view that the housing bubble is building in Nigeria may be onto something. Property values have seen an incredible rise over the
last five years.
Most people look back at the rate of development in Lagos today and the sharp real estate price movements and wonder why they did they not invest in Lagos Nigeria real estate sooner.
For example, as at the time of this writing, the rental price for a 3 bedroom luxury flat in Ocean Parade Towers Banana Island Ikoyi goes for $140,000 U.S. dollars per annum. Two years earlier, the same apartment went for $65,000 U.S. dollars. That is over 100 percent rise in rental price over a two year period.
A 3 bedroom bungalow in Sparklight estate on the Lagos Ibadan expressway sold for 6.5 million Naira some two years back. Today, as at the time of this
writing, that same apartment goes for 14 million Naira.
Real estate prices are rising at an alarming rate in Lagos Nigeria. And this is because the population of Lagos is rapidly rising because more and more
people are coming to Lagos in search of the golden fleece.
The recent crash of the Nigeria stock exchange has also compelled many to turn to real estate investing as the sure way to grow their investment. That has pushed the demand for Lagos real estate up and, hence, prices has soared.
Is this a sign of a housing bubble or real estate bubble building in Lagos Nigeria?
While it is true that rental and purchase prices of properties in Lagos has developed a mind of their own and gone wild, it may not exactly translate
to a buildup of a real estate bubble.
The simple reason is because the price movements are driven by market forces of demand and supply. Demand is higher than supply in this market.
Consequently, property owners take price increases confident that Lagosians will have no choice but to pay.
In some cases, landlords have taken 50-100% 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 'outrageous' price. That gives landlords the confidence to take unsubstantiated price increases.
Viewed from that perspective, a housing bubble is a long way from hitting Lagos Nigeria.
However, the prices of luxury apartments and land in Victoria Island, Ikoyi, and Lekki is frightening.
In Lekki phase 1, for instance, some lands go for as high as =130 million Naira (about $1 million U.S. dollars). Some properties in Victoria Island and Ikoyi have a purchase price as high as =N=400 million Naira (about $2.5 million U.S. dollars).
Those prices are frightening. Many fear that Lekki properties are overpriced. And that a housing bubble or real estate bubble may be in the offing.
A real estate bubble or property bubble is bad news. It means that sometime in the near future, real estate prices will crash and that thousands of
people will see the value of their investment eroded.
While this is bad news for investors who staked their personal funds on real estate investment, it will be double tragedy for folks who took big loans from banks to invest in real estate.
In simple terms . . . consult a trust worthy real estate agent when buying (or renting) property for sale in Lagos (or apartments for rent). Together you can look at the opportunities and evaluate where you're likely to get the most value for your money.