Recent hikes in the market prices of building supplies have shattered the hopes of potential homeowners and posed significant challenges for housing developers and contractors.
This one-page summary explores the impact of escalating building materials prices on the Nigerian real estate market and suggests potential solutions to alleviate the crisis.
Price Increases and Impact:
Between January 2022 and May 2023, prices of building supplies have increased by over 70%, making it difficult for potential homeowners to afford construction expenses.
Housing developers and contractors struggle to provide inexpensive housing to over 75% of Nigerians lacking access to suitable homes, leading to a spiralling increase in home costs and project delays.
Inflation and Consumer Price Index (CPI):
In March 2023, the consumer price index (CPI) rose to 22.04%, higher than the previous month’s rate of 21.91%, indicating a persistent increase in prices for goods and services.
The National Bureau of Statistics (NBS) reported that Nigeria’s inflation rate has risen three times since the beginning of the year, contributing to the surge in building materials prices.
Impact on Construction Materials:
Cement prices have experienced significant increases in the past 15 months, affecting the costs of other construction materials such as blocks, rings, paint, sanitary and structural fittings, sand, roofing materials, tiles, and granite.
For example, a 50-kilogram bag of cement that cost N3,500 last year is now being sold for between N4,700 and N4,800. Iron rods, paints, and sanitary fixtures have also seen substantial price hikes.
The rising prices of building materials make it challenging for developers in major cities like Lagos, Port Harcourt, Abuja, Kano, Ibadan, and Enugu to maximize profits.
This situation has resulted in a slowdown in new home construction and a decline in rental housing, making it difficult for average tenants to find affordable housing options.
Solutions and Recommendations:
Kenneth Nduka, a former president of the Nigerian Institute of Building (NIOB), suggests government intervention in the form of subsidies for the social housing market and tax breaks for builders to make housing more affordable.
Nduka emphasizes the need for standards and price controls to prevent indiscriminate rises in material prices and calls for strategic inventory management by the government to address market fluctuations.
Escalating building materials prices pose significant challenges for both aspiring homeowners and developers in Nigeria. Urgent measures such as government subsidies, tax breaks, and inventory management are needed to address this crisis and make housing more affordable for all.