Builders, home-buyers to pay more as building material prices soar

by | January 26, 2018 12:05 pm

The building materials market in Nigeria has, in the last 12 months, seen a significant price increase, meaning that those who have building projects at hand or are intending to start a new project have  urgent need to alter their budget to accommodate the increase.
Similarly, the man who wants to buy a new home has to take a second look at his pocket as the increase in the materials prices ultimately translates to increase in house prices.
A recent market survey shows well over 40 percent average price increase across various material types in different local markets. The prices of finishing products have gone up the most with cables or wiring materials topping the list.
According to the survey contained in a report by Northcourt Real Estate, between November 2016 and a corresponding period in 2017, the price of cables (6mm/coil) went up 83.91 percent to N32,000, up from N17,400 a year ago. The price of cement, a major building component, also went up within the same period by 20.45 percent to N2,650, up from N2,200.
Another material whose price has seen significant increase is glass sheet (5mm), which has gone up by 56.52 percent from N11,500 per sheet in 2016 to N18,000 in 2017. This is followed by coloured emulsion paint (low grade) whose price has risen from N8,500 per bucket to N13,000, representing a 52.94 percent  increase.
The price of complete set of WC has gone up within 12 months by 51.52 percent to N25,000, up from N16,500, just as the price of reinforcement or iron rod (10mm) has gone up 37 percent to N220,000 per ton, up from N160,000 per ton  in November 2016.
When BusinessDay visited the Pako building material market in Isolo, a Lagos suburb, a cement seller who introduced himself Makinde confirmed the current cement price, pointing out however that other brands than Dangote could be bought at lower prices with about N100 difference.
Debo Adejana, MD/CEO, Realty Point, developers of Cedar Luxury Homes in Lekki, Lagos, affirmed in a telephone interview that the price increase affects the builder or developer like himself as much as the home buyer.
What the price increase means is that a prospective builder who needed just N110,000 to buy N50 bags  of cement at N2,200 per bag  to build a four-bedroom bungalow, now needs about  N138,000 to buy cement alone and thereafter source for more money to buy sand, water and pay for labour.
“Though the increase in the price of sand is a bit negligible at N45,000, up from N40,000 per tipper load,  that is not the same with labour”,  said Adejana, noting that  labour has become very expensive at N3,000 – N5,000 per day.
Apart from reducing the chances of home ownership, this development also has the capacity to shrink job opportunities for both artisans and building professionals because activities are declining at project sites.
The Northcourt survey also has some interesting revelations which, according to Ayo Ibaru, a director at the company, has both positive and negative sides.  “Finishing is today the elephant in the room for developers” because the high prices have forced many developers to deliver shells to buyers”, he noted.
Continuing, he said, “by adopting this method, the developers are saving themselves the trouble of spending much on materials and increasing their cost of construction which also pushes up house prices beyond the reach of many. But while they succeed in saving their head, they put the buyers at the receiving end. So, while it is positive for the developers, it is not so for buyers”.