5 Reasons The Housing Market Is Going To Be Big In 2022

January 9, 2022

Owning an asset that provides you with a variety of excellent returns over time as well as the flexibility of property ownership can be a wise investment. The housing market can offer you a range of advantages, such as a source of passive income and a stable investment alternative.

According to the National Bureau of Statistics’ 2021 Gross Domestic Product (GDP) data, Nigeria’s real estate industry increased by 3.85 %, compared to a sharp decline of -21.99 % in 2020. The 3.85% rise is the sector’s fourth positive GDP figure in the last five years. The first positive figure was reported in the first quarter of 2019, followed by another uptick in the fourth quarter of 2020 when the sector emerged from a two-year recession, and the third in the first quarter of 2021.

Given the fact that the COVID-19 pandemic affected the Nigerian economy, it is obvious that the real estate industry had the opposite effect – with positive growth values even during the worst of the pandemic.

The housing market looks very promising. If you invest early, you may see a huge return.

The following factors will explain why the housing market will experience a surge in 2022:

A Teeming Population: Supply Is Not Meeting Demand

According to UN statistics, Nigeria’s housing deficit is estimated to be 22 million homes, and with a growing population of around 200 million people indicating that there is a high demand for residential homes for more people, and as a result, this housing need must be met. With more millennials entering the workforce and getting married, there will be more demand for housing. It won’t just be for families with children but also for those who want to buy a place of their own.

Appreciation Value Increases With Time

Although a property’s positive value is influenced by a variety of factors like its location and the development of the surrounding area, it is an undeniable reality that housing appreciates overtime when these factors are managed.

Also, if there is an increase in demand for homes in a certain location without a corresponding increase in supply, you can take advantage of the opportunity to price your property according to the situation, boosting the appreciation value of your property. Following the current favourable position of the housing market, as a property owner in an area with future development plans, you can guarantee that your property will provide you with high returns in the next year.

An Hedge Against Inflation

Because of the rise in prices for goods and services that occur in such periods as the country’s inflation, which should not interrupt your business’s capital growth. Housing can be a great inflation hedge because property values (appreciation) over time are likely to continue on a steady increase curve, and can also provide potential continuous income for you as a property owner or investor to stay afloat or even exceed inflation, especially where supply is low in response to high property demand in your area. Another strategy to leverage against inflation as a property owner is to use multi-purpose buildings, such as rental units, which allow you to renew rents from your tenants regularly, such as every year, as opposed to a one-time property sale. This option allows you to adjust the rent based on the number of units in your building structure.

A Source Of Passive Income

If nothing else, the global economic impact of Covid-19 has taught everyone the need of having passive income, and while doing so, you can take advantage of the various opportunities of housing, such as the ability to enjoy a consistent and long-term stream of good returns in 2022.

In simple terms, passive income is a way for you, as a housing property owner or investor, to generate income without having to actively work daily – a stable investment option, as you can see. Whether you’re aiming to change your financial situation or invest for retirement, owning a housing property, particularly a rental building structure, allows you to generate returns on the property over time while retaining sole ownership. A single renter can be leased out of a rental property such as a single-family home or a stand-alone rental property, which enables long-term capital growth and increases appreciation value to your property as well. Other rental properties, such as multi-family apartments, warehouses, vacation homes, and multi-purpose rental units, are excellent housing options that can provide you with year-round rental income.

The Market With Wide Options For Property Ownership

Whether you are a property owner or an investor, the housing sector provides you with a wide range of options for how you want to move forward with your investment options. In the coming year, the housing sector will offer a lot of potentials, whether it’s in terms of rental income from commercial and residential buildings or capital growth through property appreciation.

One consistent fact in this period is that there is a high demand for homes and only a limited supply to meet this demand; as a result, the housing market does not appear to be slowing down anytime soon. Quarter after quarter, the profit curve will continue to rise.

CONCLUSION

Regardless of whether you agree with the pro-investment stance in the article, real estate, and housing specifically, has always been a global force of nature that transcends politics, global economics, and social trends. The sobering reality is that for every millionaire property investor or hedge fund manager, there are hundreds or thousands whose lives have been uprooted or even shattered by rising rents and evictions.