The country’s housing sector is not yet out of the woods as the rising cost of building materials continues to impact rents and the cost of providing affordable housing to citizens.
With Nigeria’s inflation rate over 19% in July, many property developers are missing out on the best times in the industry. They began to revise upwards the prices of units in their inventories and the delivery schedule of projects due to economic difficulties, including the cost of land acquisition, scarcity of skilled labor, fluctuating currency, logistics issues and supply bottlenecks that negatively affected the projections.
More than 60% of the total cost of constructing buildings is spent on materials, while the remaining 40% is spent on labor.
Prices for essential construction materials such as rebar, sand, roofing sheets, tiles, cement and granite have increased by more than 100% in the past year.
For example, cement, which was N2, 500 before, is now; N4,300 a ton of 8mm reinforcement which was N441,000 last April, currently goes for N475,000. The same applies to granite previously sold at N140,000 for 30 tons but is above N320 , 000 for 30 tons, on the building materials market.
The development has affected rental prices in major cities like Lagos, Abuja, Ogun, Ibadan, Port Harcourt and Kano, with landlords and property managers raising rents by 80% in recent times.
The average price of one bedroom apartments for rent in an upmarket area of Lagos is around ₦900,000 per year. Three-bedroom rentals range from 1.9 million naira to over 4 million naira. Previously, landlords charged between 1 million and 1.2 million naira for a two-bedroom apartment, but this has also doubled.
In Abuja, renting a room can reach 1.2 million naira / 1.5 million naira. In scholarly quarters of Ogun State like Abeokuta GRA and others, a duplex can reach 2.5 million naira per year, while a two-bedroom apartment can reach 750,000 naira per year depending of the finish.
In strategic areas of Ibadan, where apartment rents were 1 million naira, there was an increase of about 1.5 million naira.
According to the outgoing President of the Nigerian Institute of Construction (NIOB), Mr. Kunle Awobodu, the price of building materials may continue to rise depending on the exchange rate and inflation in the country.
He said that until the government intervenes by ensuring the production of materials locally, the cost of construction will remain high.
Awobodu told the Guardian that the situation is not healthy for the construction sector, warning that it may force developers and other operators in the sector to start reducing the quality of construction to minimize costs and make profits. .
Specifically, he said, the federal government must intervene through policy formulation and ensure that developments do not escalate and cause further damage to the real estate sector.
He said soaring material prices are also a sign of desperation for low-income people in the country.
Awoboda noted that most Nigerians are now prioritizing food and other vital necessities over committing resources to building homes.
Awobodu advised Nigerians, who still want to own their homes, to roll out phased construction as a way out of the construction cost crisis. “People who have started building their house can buy materials gradually, especially critical materials like sand, and reinforcement can monthly rather than waiting to buy all the components at once. That’s because the situation is serious, with the prices of materials increasing almost every day,” he said.
A former President of the Faculty of Housing of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr. Adiatu Adesina, said that building materials are important elements in housing development and determine the price of a house on the market.
He explained that the increase in the cost of materials will affect the demand and supply of housing in the country.
Adesina said, “A lot of these construction materials are imported and with the naira-dollar exchange rate, once the dollar goes up it affects everything. For those that are not imported materials like gravel/granite, sharp sand, the prices have gone up and the excuse for that is the high cost of diesel. To blast stones, these heavy equipments need diesel, the price of diesel has increased from N250 to over N800 now.
He said housing for low income people is becoming too difficult to achieve now as few Nigerians can afford to buy a 10 million naira house in the low cost housing market.
Government, he said, must make single digit loan facilities available to property developers at this critical time, to pursue housing projects, while construction materials should be produced locally by industries. local.