How social distancing, uncertainties in economy affect property market

As people become increasingly apprehensive of the deadly impact of coronavirus, with social distancing being observed as a preventive measure, the property market and real estate investors are taking the heat, Businessday findings reveal.

Though the impact of the rampaging virus is not yet seen or felt in house prices or rents, it is already impacting negatively on market transactions as reflected in inspections which neither buyer nor seller is ready to undertake at the moment.

Effectively, viewing which precedes buying and selling a property has stopped completely because the buyer avoids close contact with the seller or agent and vice versa.

“Prices and rents are not affected yet; but the way we are going, if this continues till the next one month, prices will drop significantly,” Gbenga Olaniyan, CEO, Estate Links, told Businessday on phone.

Chidi Etoniru, managing partner of Joe Etoniru and Associates, a real estate development company, corroborated this.

“We had a client who wanted to buy a property, and we already finalised everything, but due to the virus outbreak and currency uncertainty, he said he would want to wait for the next 90 days to watch the market,” Etoniru said.

The fear and apprehension which this deadly virus has created in people is allpervading and has led to uncertainty in the economy. People have issues bordering on job security, health status and life itself.

“With many workplaces closing down operations, the stock market crashing and economic activities grounding to a halt with attendant loss of income, real estate sales will take a hit over the coming weeks and months,” said Jolayemi Ekundayo, a real estate consultant and marketer.

Ekundayo explained that there might be declining interest from home buyers, noting that the property market has been weak for some time, and rents have fallen considerably in major cities such as Abuja, Lagos and Port Harcourt.

A Broll Intel Property Market Viewpoint for the second half of 2019 had predicted the market would be stabilising by now but the deadly virus is threatening it. Before now, industry experts had projected that the market would grow at 2.65 percent in 2020 with a high expectation that the sub-markets were also going to stabilise.

In the face of the growing apprehension and uncertainty, analysts say except the government takes necessary steps to strengthen the economy, the pandemic will push the economy into another recession.

This explains the expectation by industry players that government should announce fiscal stimulus package to reduce the negative impact of the virus on the real estate sector in particular and the economy as a whole.