-By Danlami Nasir Isah
The real estate sector considered as one of the huge contributors to the Country’s Gross Domestic Product (GDP) has suffered a huge setback caused by the Coronavirus pandemic.
The pandemic which has halted virtually all sectors of the economy has also taken its hit on the Nigeria’s real estate sector.
In a recent Gross Domestic Product report released by the National Bureau of Statistics shows that the real estate services sector contracted by 17.18 per cent in the second quarter of 2020.
The report reads in part, “In nominal terms, real estate services in the second quarter of 2020 declined by 17.18 per cent per cent, or 19.27 per cent points lower than the growth rate reported for the same period in 2019 and lower by 18.31 per cent points compared to the preceding quarter.”
Quarter-on-quarter, the sector growth rate was lower by 1.24 per cent.
The contribution to nominal GDP in Q2 2020 stood at 5.23 per cent as against 6.35 per cent recorded in Q2 2019 but same as the value in Q1 2020.
Real GDP growth recorded in the sector in the second quarter of 2020 fell by 21.99 per cent, lower than the growth recorded in Q2 2019 by 18.15 per cent points, and 17.24 per cent points relative to Q1 2020.
Quarter-on-quarter, the sector declined by 2.71 per cent in the second quarter of 2020.
It contributed 5.30 per cent to real GDP in Q2 2020, lower than the 6.43 per cent it recorded in the corresponding quarter of 2019.
In the NBS report, Nigeria’s GDP decreased by 6.10 per cent (year-on-year) in real terms in the second quarter of 2020, ending the third year trend of low but positive real growth rates recorded since the 2016/17 recession.
The decline was largely attributable to significantly lower levels of both domestic and international economic activity during the quarter, which resulted from nationwide shutdown aimed at containing the COVID-19 pandemic.
The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets among others, affecting both local and international trades.
The domestic efforts ranged from initial restrictions of human and vehicular movement implemented in only a few states to a nationwide curfew, bans on domestic and international travel, closure of schools and markets among others, affecting both local and international trades.
Nigeria has an estimated population of about 200 million people with about 98 million living in extreme poverty.
Worse off, the country often regarded as the giant of Africa has about 20 million housing deficit.
In addition, a survey done by a national newspaper (BusinessDay) has shown that about 90 percent of house acquisition in the country is funded by individual savings, due to the funding constraints in the country’s real estate sector.
Reacting to the development, a property development expert, Sani Mustapha said asides the obvious fact that the Covid-19 pandemic contributes largely to the drop in GDP contributions, mortgage rates over-priced properties are adding up to the challenges facing the sector.
For instance, he said “Nigeria possessed one of the highest mortgage rates in Africa, as it’s mortgage to GDP ratio is less than 1 percent, as against 2 percent in Ghana and over 30 percent in other saner and developed countries.
“Mass housing, for which there is huge demand, is most likely unpatronized because incomes are low and credit is crucial. More high-end property, plenty of which are empty in places like Abuja, Lagos and Port Harcourt have not enjoyed much customer-patronage because the rent economy, fuelled by political patronage, has been hiderances for over a decade now which is not a good sign for the growth of the sector at all,”
Asked how the housing deficit in the country can be bridged and way forward for the sector to begin recovery, Mustapha stated that the housing programme of the federal and state government’s must be expanded.
According to him, “What we currently have just covers 10% of what’s is obtainable in other climes. We need massive housing schemes for residents as what the government is doing currently is too small to solve the several challenges,”
He further stated that as long as Inflation keeps rising, prices of building materials will keep rising, and by extension cost of buying or renting properties.
He advised the government to do everything possible to see how to reduce inflationary factors so that cost of properties can also be affordable to average and ordinary citizens.