Why is everybody buying properties?
Skeptics are wondering why the ravaging coronavirus pandemic is not ‘seriously’ impacting property markets and market data are still going up. All times are good times to buy properties depending on which type is desired. The real wealth (capital gain) is made by selling when everybody is buying (period of economic boom) and buying when everybody is selling (period of economic crisis). Properties are the only luxury common to everybody as it is a bundle of joy according to Professor Babatunde Samuel Agbola of Centre for Urban and Regional Planning, University of Ibadan.
Realtors, economists and major property investors attribute continuous purchase of properties in advanced countries during the pandemic to the low mortgage rate which everybody is trying to take advantage of. Property investment remains a save haven during pandemic and those who have properties seem to worry less during pandemic. According to Tendayi Kapfidze, an economist with Lending Tree, the interest rate is giving home buyers a lot of buying power right now. A lot of buyers are in their middle thirties to early forties. They must settle down, pandemic or no pandemic!
According to Theresa Ghillarduci of Bloomberg, “A pandemic is a terrible period to buy real estate. Home prices are high and so is uncertainty.” Things cannot go worse after pandemic so everybody wants to have a piece of the action during pandemic because the best is the only option after any pandemic. The only problem is that nobody can predict when the pandemic will be over but it will definitely be over. Billionaire John Paulson opined that “I still think buying a home is the best investment any individual can make.”
Housing is a basic need of man. It is the basic need next to unavoidable food. It confers status to owners as ‘landlord’; it is a store of value and whether now or later, everybody desires to have it in everybody’s lifetime. To prospective house buyers who think the coronavirus will lead to a crash in the property market globally, this is not so. Hamptons, a wealthy beach community outside New York City, experienced property price hike of up to 25%. Lekki environ and Ikeja GRA all in Lagos State continued to receive high property investors’ patronage even in the pandemic era. A visitor to Epe via Lekki-Epe Expressway will be surprised with the number of housing starts in that corridor.
According to United Nations, globally, over 1.6 billion people are living in inadequate housing with over 1.0 billion living in slum or squalid quarters and informal settlements. The World Bank reported in 2018 that Nigeria requires to build 700,000 housing units every year to meet her housing adequacy. With self-help, individuals are trying to bridge the housing need gap. Mark Twain said: “Buy land, they aren’t making any more of it”. People are keeping to these words by buying land before it becomes a scarce commodity. Land holding, like shareholding, can be improved upon with time. A buyer can buy land today and improve on it by adding value and build a residential or office apartment on it in the future.
Young property investors prefer to buy properties to shares and bonds. A lot of buyers both young and old are paying through banks’ transfer and bank draft, meaning that they are skeptical of total crash in money market during the pandemic. They are aware the property market cannot crash to level zero. Finance houses and other non-real estate corporate organisations which bought properties are hedging against inflation and are sure of property value appreciation after the pandemic. Good properties, especially those bought at discounts, are good form of investing customers’ fund at a period when export and import is ceased.
There have been more aggressive marketing and improved marketing strategies of properties of late. Multi-level marketing has been introduced in property market in Nigeria, while there are developers and brokers’ finance of properties bought by clients. Instalmental payment of property purchase price is encouraging buyers to climb the property ladder with ease. Social media have been very helpful in information dissemination about properties and their prices. Facebook, Twitter, Instagram and WeChat. E-commerce, internet marketing and virtual meetings (internet inspection through Zoom, Facebook and WhatApps) are also playing a big role.
Email, SMS (short message service) and one-to-one mass marketing are achieving results. There is caution in property investment in that not all locations will experience capital gain. Also, most non-professionals are throwing caution into the wind and are only in real estate industry to make quick money. They sell government land, right-of-way and setbacks especially in the Lekki axis. Over N1 trillion have gone into the drains according to research. Rogue agents are only after the money and will offer fake land to buyers. Engaging a professional Estate Surveyor and Valuer is the only way out.
Oyedele is a Lagos-based Estate Surveyor and Valuer.
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