Business

Expert decries rising cost of building materials, property

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2 years ago

Apparently worried by the nation’s economic challenges, Founder and Chief Executive, Cromwell PSI, Mr Sola Enitan, has decried the inflationary pressures on the cost of building materials and the real estate market in Nigeria.

These pressures, he said, have resulted in the high cost of building materials and a rise in property prices across the nation.

According to him, the cost of renting or buying a property in Lagos, Nigeria’s commercial hub, has increased by 75 percent in some locations.

He explained that the high cost of materials had made it difficult for developers to complete projects on time and within budget, adding that it had also led to an increase in the cost of rent and housing prices.

Enitan stated that the cost of steel has also risen in Nigeria, with prices increasing by over 60 percent in some locations.

“According to the Nigeria Customs Service, steel imports to Nigeria increased by 15 percent in 2020 compared to 2019, despite the pandemic-induced disruptions in global supply chains,” he said.

He lamented that the cost of production has increased significantly due to high inflation, rising fuel prices, and frequent power outages.

These costs, he said, were often passed on to consumers, including those in the real estate market.

Enitan also noted that the country has been grappling with insecurity issues such as terrorism, kidnapping, and banditry, leading to a lack of investor confidence and a slowdown in economic growth.

“In summary, data shows that Nigeria is facing inflationary pressures on the cost of building materials and the real estate market, which are caused by a range of economic challenges such as currency devaluation, rising costs of production, supply chain disruptions, and insecurity,” he said.

To address these challenges, Enitan said that the Nigerian government should implement policies that promote economic stability, improve security, and encourage investment in local manufacturing industries to reduce the reliance on imported building materials.

Additionally, he said there was a need for increased transparency and accountability in the real estate market to curb price gouging and improve access to affordable housing for Nigerians.

“According to the National Bureau of Statistics (NBS), the inflation rate in Nigeria stood at 18.17 per cent in March 2021, which is the highest rate in four years. This high inflation rate has led to an increase in the cost of building materials and the real estate market.

“The cost of cement, a key building material, has increased significantly in Nigeria. In April 2021, the price of a bag of cement in Nigeria was around 3,500 naira (approximately $9), which is a 40 percent increase from the previous year’s price of N2,500 (approximately $6.5) per bag.

“As of this year, 2023, the cement price is selling at about N4,500.

“This increase has been attributed to the high cost of production and logistics, including transportation costs, and the devaluation of the naira,” he said.

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