In difficult situations, the expectation is that prices of commodities go up. Household necessities, luxury items, tuition, entertainment, transportation – everything but houses, become expensive.
One of the indices listed by the Forbes for knowing when to buy a house is a near collapse of the financial industry. It is more of a rule rather an exception for prices of houses to either reduce significantly or crash drastically during an economic downturn like the one Nigeria is experiencing presently. The reason is simple – demand deficit.
In times like these, income squeezes engendered by crashing global oil prices and gross imbalance in foreign exchange buoyed by strict fiscal policies from a confused money regulator, families often find it difficult to survive. Many move attention from investment to containing expenses. The number of people looking to buy new houses shrinks.
At the moment, the industry is one of the hard hit as demand has drastically reduced and dragged prices downward. Prices of houses across the ends are being reviewed by developers. The nature of the real estate industry in Nigeria is in three folds. There is the high end such as homeowners in areas like Banana Island, Parkview Ikoyi, Victoria Island, Asokoro a Maitama, Trans Amadi, Peter Odili Way and so on. The middle end includes owners of properties in places such as Gbagada, Ajah, Ikeja, Bwari etc. The low ends are those found within residents like Ebute-Meta, Mushin, Agege, Ebute Ero, Agbara, Mowe and many more.
The price of land – and to a large extent houses, depends on the availability of infrastructure. The high end attracts high prices because the infrastructure is available and kept in prime conditions. It is different in the middle and the low ends where prices vary depending on the extent of infrastructure present.
Buyers have the advantage when sales are slow because they have an opportunity to pick up a house on the cheap. However, it is also important to know what to do to get the best bargains.
Firstly, don’t walk into a transaction blindly, observe due diligence. In other words, do your homework. It will really pay you to be observant, listen to homeowners. Some of them may want to sell their homes in a hurry. Sometimes a home has been on the market for months and undergone several price reductions.
You may go direct to the house owner or need to inquire with a real estate agent or a realtor. The truth is that when sales are slow, the agents are also struggling hence be ready to negotiate. Give yourself bargaining room by not limiting your research to one property.
Consider getting a mortgage. In this regard, it should interest you to know that the Nigeria Mortgage Refinance Company, NMRC, have increased the opportunity to get mortgage through their recent refinancing efforts. Some mortgage institutions like Imperial Homes Mortgage Bank Limited and Homebase Mortgage Bank Limited have benefited from the investment. Importantly, their conditions are becoming less stringent.
Once you get a good deal it might be in your best interest to not delay the decision to buy. Bear in mind another hunter buyer could be lurking by. To make sure that does not happen, get a pre-mortgage agreement and a lawyer to wrap up the transaction and paperwork.
FRANK ELEANYA
