According to the National Association of Realtors, the median home price in the United States of America, was between N22.7million to N36.6million

According to the National Association of Realtors, the median home price (the point at which half of all homes are sold for more and half are sold for less) in the United States of America, was between N22.7million to N36.6million (see box). If you are to take the high end of the range, i.e. N36.6million, you still won’t be able to buy a house in many parts of Lagos State. That includes the Mainland, which hitherto had been the refuge of less well endowed property seekers.

We accept that traditionally, locations such as Ikeja GRA, Sonibare Estate and Ogudu GRA had followed closely on property prices in Ikoyi and Lekki, based primarily on market sentiment. But even areas like Anthony Village, Surulere, Gbagada, Yaba, Palmgrove, Ebute Metta, Ajao Estate, Ikeja and so on are well outside this range. In most of these locations, one cannot even purchase land at these prices. even moving further afield, there are some starling prices like the 5 bedroom ‘executive house at Gemade Estate, Paja for N35m or the 5 bedroom house at dankaro Estate, Ojodu for N35-N38m. To be able to get a decent house at prices well below the US median prices, one has to move further down to places like Ikorodu, Arepo, and Akute.

The house prices have naturally impacted on rentals. To get a decent three bedroom flat in the central Mainland areas, the prospective tenant should have approximately N800,000 per annum as rent in his budget. Considering that this translates to about N2million outflow when two years advance rent and fees are calculated, it is staggering sum indeed. In Yaba, Ikeja, Gbagada, Shangisha, Ilupeju there are three bedroom flats with rental price tags of N1m per annum. Opebi in Ikeja has flats with rents of N2.5m to N4m. If these areas are considered upscale, other locations are catching up fast: there’s a 3 bedroom flat in Alapere, Ketu for lease at N900,000 per annum.

When CASTLES spoke with a number of real estate practitioners on the demand for such properties, they argued that there is a market for these properties. Some reasoned that top flight executives who cannot afford Island prices were the reason for sustaining or even increasing prices on the Mainland. Others said that it was a myth that everyone wants to live on the Island. A significant number of people of means are very comfortable with the Mainland and have no intention or desire to go ‘across the bridge’. The third plank of their argument is that the Naira keeps devaluing and N1m is not quite what it used to be. Finally, the concluded that there were varying standards of property and a three bedroom flat as described by the owner might be two rooms and a cupboard, not a third bedroom. When a landlord in the vicinity learns that a property like that has been let out at a certain price and he has a flat with the standard three rooms, he would immediately increase his asking rent, on the premise that his flat is much better than the one let

There is some validity in these points but when one looks at the purchasing power of the average Lagosian, it is doubtful if these prices can be sustained in the long run. What should also be of concern even for those investing in these types of properties, is that most developments o the Mainland are all aiming for this market, just like the developers on the Island. There are a number of high end developments coming up not only as you would expect in Ikeja GRA and Sonibare Estate, but also Anthony Village, Yaba, Ilupeju and Maryland. Who will buy or rent all these properties? On our cover page story, we see an analysis of how population growth affects house values in the US, but only growth of the population with good jobs will work the magic. The bubble of spending that the elections will bring may defer that day, but if the economic fortunes of the prospective tenants and buyers do not improve, who will pay these high prices and rents on the Mainland?

Median Home Prices in the United States