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- December 16, 2024
- Real-estate
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3 MAJOR ECONOMIC KEY FACTORS THAT IMPACTS REAL ESTATE MARKET IN NIGERIA.
GDP GROWTH RATE: Nigerias gdp growth has steadily increased effectively driving the demand in nigerias real estate. As of the second quarter of 2024, the gdp growth rate of Nigeria economy statistics is 3.19%(year-on-year) in real terms. This growth rate is higher than the 2.51% recorded in the second quarter of 2023 and higher than the first quarter of 2024 growth of 2.98% with the nigerias real estate sector contributing 5.20% to the country gdp in 2024 with a population growth that continues to drive the demand in residential estates, particularly in the mid-market areas.
The real estate market value in Nigeria is projected to grow by 7.24% and reach a total estimated value of $2.14trn by the end of 2024. Residential real estate holds the largest share with an estimated market volume of $1.77 trn by EOY 2024.
INTREST RATES : interest rates influences mortgage affordability and demand for real estate, as high interest rates reduces demands for housing and commercial properties making borrowing more expensive also lower property prices tends to fall as demand decreases while increased mortgage costs higher interest in mortgaged repayments, making it more challenging for buyers to afford properties.
In other words low interest rates increases demand making borrowing cheaper with high demand for housing and commercial properties also low interest rates stimulates construction activity as developers can secure funding at lower costs and allows the sales of properties profitable.
INFLATION RATE: Nigerias inflation has been fluctuating and as of the latest data available the inflation rate stands at 33.88%. This inflation rate can significantly impact the real estate market in nigeria.
Inflation rate can affect the real estate investment by purchasing power erosion ,interest rates dynamics,rental income adjustments,capital appreciation potential,construction and maintenance to navigate these challenges,its essential for real estate investors and stake holders to stay informed about inflation trends and adapt their strategies accordingly.
In addition real estate market values as historically shown resilience against inflation with the potential for capital appreciation. Investors strategically positioned in growth areas may see their property values increase overtime acting as a safeguard against inflationary pressures.
