Cultural Bias in Property Valuation: The Hidden Cost of Discrimination

ESV Obaze Francis Onyeka

Property valuation is a critical process in real estate, determining how much a property is worth for sales, loans, or investment purposes. However, beneath the surface of data and market analysis lies a troubling issue cultural bias. In many countries, including Nigeria, subtle forms of discrimination in property valuation have real economic consequences, often widening wealth gaps and reinforcing social inequality.

Cultural bias in property valuation occurs when subjective factors such as ethnicity, religion, social class, or neighborhood stereotypes influence how properties are assessed. This bias may not always be intentional, but its effects are damaging. For example, properties in certain communities may be undervalued simply because they are associated with a marginalized ethnic group or perceived as ‘low-status’ areas, regardless of actual market demand or infrastructure quality.

A 2021 study in the United States highlighted this issue when it found that Black homeowners often received lower property appraisals compared to similar homes owned by White families. The study revealed that homes in predominantly Black neighborhoods were consistently undervalued, costing homeowners billions in lost equity. While Nigeria lacks comprehensive studies on this issue, anecdotal evidence suggests that similar patterns exist, particularly in urban centers like Lagos, Port Harcourt, and Abuja.

In Nigeria’s diverse society, ethnic and cultural sentiments sometimes seep into real estate decisions. Investors or valuers may unconsciously apply lower value estimates to properties in communities associated with minority groups or indigenous populations. In some cases, buyers are discouraged from investing in certain areas due to cultural or religious biases, affecting demand and consequently property prices.

The financial implications are significant. When properties are undervalued due to bias, owners lose potential wealth. They may receive lower offers when selling, qualify for smaller loans when using property as collateral, or miss out on investment opportunities. On a larger scale, biased valuations distort market data, affecting planning, taxation, and economic projections. This can lead to skewed development policies that favor certain regions over others.

Moreover, cultural bias in property valuation perpetuates inequality. Communities repeatedly subjected to undervaluation are deprived of wealth-building opportunities, hindering social mobility. This reinforces a cycle where marginalized groups remain economically disadvantaged, while favored communities continue to attract investment and higher valuations.

Addressing this hidden cost of discrimination requires a multi-pronged approach. First, professional valuers must adhere strictly to objective market data and transparent criteria. Regulatory bodies like the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) should enforce anti-discrimination standards and penalize unethical practices.

Second, there is a need for more comprehensive research and data collection on valuation disparities in Nigeria. Without clear evidence, it becomes easy to dismiss cultural bias as mere perception. Independent studies can highlight patterns and drive policy changes.

Third, public awareness campaigns can help challenge stereotypes associated with certain communities or regions. When investors and valuers are conscious of their biases, they are more likely to act fairly and objectively.

Finally, governments must ensure equitable infrastructure development across regions. Often, biases are reinforced by genuine disparities in amenities and public services. Closing these gaps can change perceptions and bring fairness to property valuation.

In conclusion, cultural bias in property valuation is a hidden cost that distorts real estate markets and deepens inequality. While often overlooked, its impact is far-reaching affecting individual wealth, community development, and national economic health. Tackling this issue is not just a moral imperative but a necessary step toward a fairer, more inclusive property market.

ESV Obaze Francis Onyeka, a practicing Estate Surveyor and Valuer , wrote from Enugu, Nigeria.