The housing market in Nigeria is grappling with the surging cost of building materials, a trend that has far-reaching consequences for affordability, project timelines, and overall market dynamics. With Nigeria already facing a housing deficit estimated at over 20 million units, according to the Federal Mortgage Bank of Nigeria, the rising costs of materials are worsening an already dire situation.
Key Drivers of Material Price Increases
1.Currency Depreciation
The depreciation of the naira against major foreign currencies has increased the cost of imported materials such as steel, aluminum, and tiles. Between 2020 and 2024, the naira experienced a devaluation of over 50% against the US dollar. This has made it significantly more expensive for developers to procure essential materials, particularly those not produced locally.
2. Global Supply Chain Disruptions
The COVID-19 pandemic, followed by geopolitical conflicts like the Russia-Ukraine war, has disrupted global supply chains. Materials such as cement and iron rods, which are heavily reliant on international trade, have seen price hikes. The price of a ton of steel rose globally by nearly 30% in 2023 alone.
3. Inflation and Energy Costs
Nigeria’s rising inflation rate is a major driver of the increasing cost of building materials. The removal of subsidies on petroleum products in 2023 has also caused a surge in fuel prices, significantly raising transportation costs for delivering materials to construction sites.
4. Policy and Tariffs
High import tariffs on raw materials and finished products significantly contribute to rising costs. These policies have further inflated the already high price of cement in Nigeria, which ranks among the most expensive in sub-Saharan Africa.
Cost of Building Material (2018-2024)
| Cost of Building materials | |||||||
| Description | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
| Cement (50kg) | 2,700 | 2,600 | 2,600 | 3,500 | 4,000 | 4,800 | 7,750 |
| Sandcrete block (9 inch) | 210 | 240 | 230 | 280 | 320 | 450 | 700 |
| Aluminium Roofing sheet (0.55mm) | 1,800 | 3,000 | 2,650 | 3,800 | 4,500 | 6,500 | 7,500 |
| Cables (6mm/Coil) | 35,000 | 32,000 | 24,000 | 34,200 | 52,000 | 57,000 | 98,000 |
| Paving Stone 60mm (Local) | 1,800 | 4,800 | 4,500 | 4,500 | 5,900 | 5,900 | 7,000 |
| White Emulsion (Dulux) | 30,368 | 31,000 | 35,000 | 16,500 | 25,000 | 27,000 | 50,000 |
| Twyford Complete Set WC | 14,500 | 27,000 | 25,000 | 48,000 | 60,000 | 70,600 | 81,000 |
| Ariston Water Heater (Small) | 25,000 | 24,000 | 25,000 | 31,000 | 48,000 | 65,000 | 105,000 |
| 13A socket | 1,500 | 800 | 700 | 1,300 | 1,500 | 1,500 | 1,700 |
| Distribution Board | 48,000 | 48,000 | 45,000 | 48000 | 58000 | 110,000 | 112,740 |
Impacts on the Housing Market
The impact of rising building material costs is evident across several dimensions of Nigeria’s housing market:
1. Higher Housing Costs
The rising cost of building materials has pushed up property prices, placing homeownership out of reach for many Nigerians. A three-bedroom bungalow that cost approximately ₦10 million to construct in 2020 now requires about ₦15–₦18 million in 2024, a 50–80% increase.
2. Project Delays and Cancellations
Developers are struggling to maintain project timelines due to budget overruns caused by fluctuating material prices. Reports suggest that over 30% of housing projects initiated in 2023 are either delayed or abandoned.
3. Housing Affordability Crisis
Nigeria’s housing affordability index continues to deteriorate. With the average annual household income at ₦2 million, many Nigerians cannot afford rising rents or purchase costs. Low-income families, in particular, are disproportionately affected.
4. Shift in Housing Preferences
Buyers and renters are going for smaller units or shared housing arrangements to reduce costs. This trend is evident in Lagos, where demand for one-bedroom apartments and studio units has surged by 20% in the last year.
Strategies for Mitigation
While the challenges are significant, there are actionable strategies that can help stabilize the housing market:
1.Promoting Local Production
Increasing domestic production of essential materials such as cement and steel can reduce reliance on imports. Dangote Cement, for example, has ramped up production to meet local demand, but further investments in this sector is needed.
2. Adopting Alternative Materials
Developers are exploring the use of affordable and sustainable materials such as compressed earth blocks, bamboo, and recycled construction waste. These materials can lower costs while promoting environmental sustainability.
Read More: Solving Nigeria’s housing crisis with alternative building materials
Read More: 5 Reasons Why Property Developers Should Embrace Sustainability When Building
4. Government Support
The government can introduce subsidies for developers focused on affordable housing or reduce tariffs on imported materials to alleviate financial pressure. Additionally, expanding access to mortgage financing through initiatives like the National Housing Fund can support buyers.
5. Leveraging Technology
The adoption of Building Information Modeling (BIM) and prefabrication technologies can streamline construction processes, reduce material waste, and improve cost efficiency.
6. Innovative Financing Solutions
Housing cooperatives and public-private partnerships can provide innovative funding mechanisms to support both developers and buyers. Developers could also explore rent-to-own schemes to make housing more accessible.
Conclusion
The rising cost of building materials is a critical challenge for Nigeria’s housing market, exacerbating affordability issues and delaying much-needed projects. However, with strategic interventions such as boosting local production, adopting alternative materials, and leveraging technology, the sector can mitigate these impacts. Collaborative efforts from government agencies, developers, and financial institutions are essential to ensure that housing remains accessible for Nigeria’s growing population.
As Nigeria’s urban population continues to grow, the need for affordable and sustainable housing solutions cannot be overstated. Addressing the rising costs of building materials is a crucial step in closing the housing deficit and fostering economic growth.
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