Nigeria: Despite $7bln contribution to GDP, housing shortage prevailed in 2024

Zawya

30-12-2024

DESPITE the combined real estate and construction sectors contributing an impressive N11 trillion to the country's GDP, high costs of building materials have heightened homelessness among Nigerians in 2024.
Due to inflated costs of building materials, Nigerian Tribune findings show that more Nigerians have become homeless; many real estate developers struggled with their projects while some abandoned construction activities.
The general inflation also eroded consumers' purchasing power, weakened demand for affordable homes, while cost of two-bedroom flat in locations like Abule Egba, Ipaja and Ikotun were increased astronomically between N25 million and N35 million from N12 million and N20 million in 2023.
As at Sunday, findings showed that rental values for existing housing units were jacked up more than 100 percent than what they used to be last year.
For example: rental values for a two-bedroom apartment in Lagos'suburbs of Ojodu, Abule Egba, Ipaja, Ayobo, Egbeda and Ikotun now range between N800,000 and N1.6 million from N350,000 to N800,000 in December 2023.
Despite the expected 20,000 affordable housing units in 2024, Nigeria, according to a report, is believed to have the highest number of homeless people in the world, with an estimated 24.4 million people without a home. This is roughly 13 percent of the country's population.
Raising the alarm, home builders have blamed the situation on a number of factors, majorly high building materials' cost, high cost of borrowing and forex volatility.
Presently, in Nigeria's building materials market, a 50 kilogramme bag of Dangote Cement costs N10,000, while Lafarge Cement costs N9,950 in Lagos, depending on location
Also, prices of reinforcement bar popularly known as iron rods have been on the increase lately.
In some markets, iron rod of 10 millimetre (mm) costs -N3,300; 12mm: N4,800; 16mm: N8,500; 20mm: N13,000; 25mm: N21,000 and 30mm: N30,500, respectively. A ton of 12 mm iron rods in N415,000
Former president of the Nigerian Institute of Building (NIOB), Kunle Awobodu, pointed out that quantity surveyor's Bills of Quantity (BoQ) have become unreliable due to unforeseen fluctuation of prices of cement.
'This is not good for the industry. The increase in cement prices has affected clients' budget as most of them have become obstinate because they already made their projection.
'This is leading to disagreement. If you are not strong, you will be tempted to cut corners,' he said.
He explained that most developers that took money from off-takers could not deliver due to surge in building materials costs.
'Most developers that have taken money from off-takers, sold the houses ahead during construction, are not finding it difficult to deliver due to surge in the prices of building materials.
Nobody wants to invest without making profit. This signal will lead to temptation and reduction of quality
'Block producers are now finding it hard, not knowing what to do. They will increase prices of blocks. The rapid inflation is not good for the construction industry,' Awobodu said
Built environment expert, Olufemi Oyedele said that the current price of a 50 kilogramme bag of cement at N10,000 is worrisome, adding that it was alarming especially with Nigeria's huge housing deficit currently estimated at 22 million units.
Oyedele, who is an estate surveyor and valuer, pointed out that too much pressure on cement was responsible, explaining that the usage of cement is currently higher than normal.
According to him, the local manufacturers cannot meet the demand for cement for building and road construction, hence the higher price.
High cement price, he said has impacted negatively on housing starts, adding that people stopped their plan to start the construction of buildings, while expecting the price of cement to come down.
'Secondly, the sandcrete blocks manufacturers will reduce the amount of cement in the mixture of the mortar to from their blocks.
'Thirdly, those Nigerians who have started their construction will halt construction works and lastly, the strength of concrete columns and deckings will be compromised especially by contractors who won building contracts when a bag of 50 kilogramme of cement was N5,000.
Due to cement and other building materials' high prices, Oyedele said that most property developers and many home builders have gone into hibernation or maintain a sit-down-and-look posture with the hope that the price of cement will come down in the New Year.
'The high price of cement is already impacting construction activities as in December of every year, being a milestone and dry season, construction activities usually peaked. This time around, there is lull in the building construction sites as people who supposed to be on sites are folding their arms,' he said.
Due to high costs of cement and housing units, he said that it has not been easy for salary earners in need of houses of their own in Nigeria as their median salary couldn't get a befitting accommodation.
'I hope this trend will change as housing is a basic right of all Nigerians. There are many alternatives to cement.
'Unfortunately, we are not giving housing the attention it requires in Nigeria, hence lack of attention to the alternative materials,' he said.
Oyedele suggested that the alternatives of cement in block-work in building construction are bricks, cut stones, plastic blocks, aluminium, glass blocks and wood sheets or boards.
According to him, a country with 22 million housing deficits should be able to manufacture wood particle boards laminated with plastic membrane to achieve affordability.
'Nigeria is also blessed with huge deposit of laterite that we can adopt as our walling material. For tiling work, we can use resin gum. Synthetic rubber resin adhesive is a perfect alternative for cement in tiling work.
'For plastering of wall (internal dressing), we can use cheaper Plaster of Paris (POP) or wallpaper. For external rendering of wall, we can use clay-facing bricks bonded by gum or PVC panels cover.
'For concrete slab, we can use metal or wooden floors. Glass panes will reduce kitchens, toilets and bathrooms tiling,' Oyedele said.
In developed countries, Oyedele pointed out that housing was produced with local content in mind.
He said:'It is possible to achieve acceptable affordable housing in Nigeria with industrialised housing process and individuals will not have to buy cement to build their own houses.
'They will only need to get mortgage loan to buy and pay for 25 to 30 years to offset the loan.'
'We need a department in Nigeria that will be coordinating and harmonising construction process so that prospective builders can access loans and have unhindered exercise during their building period. We now lack housing culture in Nigeria, unlike in the past, and it is the bane of housing challenges in Nigeria.'
Due to high inflation and high building materials costs, the developer of Oak Homes, Olukayode Olusanya, said that the company cancelled off-plan mode of payment in his project.
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