As of July, Nigeria’s inflation rate was above 19 percent, causing hard times for estate developers in the housing sector. The country’s housing sector also suffering from the rapid inflation affecting the economy as the cost of building materials continue to skyrocket, thereby having negative impacts on rentals and the cost of affordable housing. In response to these economic challenges which include the cost of acquiring a land, lack of skilled labour, unstable foreign exchange rates, logistics problem and supply bottlenecks that have negatively affected projections, the sector has begun an upward review of prices of units for projects.
Estate developers complained that about 60 percent of the total cost of building construction is spent on materials while the remaining 40 percent is expended for labour. In 2021, the prices of reinforcement, sand, roofing sheets, tiles, cement and granite, which are essential building materials, skyrocketed by over 100 percent. Cement which used to be N2,500 is now sold for N4,300, a tonne of 8mm reinforcement that was sold for N441,000 in April 2021, is now sold for N475,000 and 30 tonnes of granite which was also sold at N140,000 is now N320,000 in the building market.
House rentals in major Nigerian cities has increased by about 80%.
Major Nigerian cities like Lagos, Abuja, Ogun, Ibadan, Port Harcourt, and Kano have been really affected by the rise in building cost so much that landlords and property managers increase rents by about 80 percent in recent times. In Lagos state, the average price for the rental of one-bedroom flats in a standard location is about N900,000 per year, while rentals for three bedrooms begin from N1.9 million to about N4 million yearly. Also, before the recent development, house owners used to charge between N1 million and N1.2 million for a two-bedroom apartment, but as of now, the price has doubled.
In Abuja also, a one-bedroom flat is rented for as high as N1.2 million and up to N1.5 million. A duplex in the exclusive areas of Ogun state also, such as Abeokuta GRA and others, could be rented for N2.5 million per year, while a two-bedroom apartment could be as high as N750,000 per year, as imposed by the landlord. Likewise in highbrow areas of Ibadan where rents for apartments was N1 million, there is now an increase to about N1.5 million.
The government is advised to enable local production of building materials.
The former President of the Nigerian Institute of Building (NIOB), Mr. Kunle Awobodu, asserted that there might be a continuous rise in the cost of building materials depending on the country’s exchange rate and current inflation. He further stated that the housing sector requires the intervention of the government through the production of locally produced materials, so as to avoid a stagnant high cost of construction. The current situation of the housing sector has also been said to be unhealthy for it, in that, developers and other workers in the sector might reduce the quality of materials to cut cost and make increased profits.
Hence, the government is also advised to formulate policies that ensure that the situation does not continue further and create more damage to the real estate sector of the country. Asides its effects on the sector, the NIOB past President said that the high cost of materials create hopelessness for meagre income earners in the country. This is because many Nigerians now prioritize feeding and other basic necessities over commitment of highly expensive resources to build homes.
FG should make loan facilities available to housing developers.
Notwithstanding the high cost of building materials, Nigerians who desire a home of their own are advised to deploy a gradual construction, by buying critical building materials gradually. This can be as a means of escape from the costs of construction, rather than waiting to buy all at once. A former chairman of the Faculty of Housing of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Adiatu Adesina, added that building materials, being essential components in housing development, determines the price of a house in the market. In addition, he urged the government to enable the availability of loan facilities to housing developers.
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