Nigeria’s housing situation may worsen over soaring building materials prices
by CHUKA UROKO
August 23, 2017 | 12:15 am| | | Start Conversation
Unless urgent steps are taken by government, the already bad housing situation in Nigeria may grow worse, as prices of building materials in the country continue to rise to levels that are unaffordable to a large number of people, especially middle and low income earners aspiring to build their own own homes.
Nigeria has a housing deficit conservatively estimated at 17 million. Home penetration in the country, according to Oguche Aguda, chief investment officer at NatanelFlorens, is just 10 percent, meaning that 90 percent of the population is renting or living in rented accommodation. The housing stock in the country is estimated at 13 million units and only 5 percent of this stock is in formal mortgage. The remaining 95 percent is considered ‘dead assets.’
The price of cement, a major building component, has gone through two significant price hikes in the last ten months, peaking at 87 percent to N2,800 per 50 kilogramme bag, as at June this year. This is a significant price jump for a product that was sold for N1,500 per bag in October 2016.
What this means is that a person who had planned to build a four-bedroom bungalow, which required 50 bags of cement at N75,000, now requires almost N150,000 to buy cement alone. Thereafter, he or she would have to source money for water, sand and labour to mould the blocks.
In a country where the proportion of the population living below poverty line is estimated at 46 percent and minimum wage is as low as N18,000 per month, thinking of building or buying one’s own home has become a tall order under the present high building materials price regime, meaning that more people will continue to be ‘homeless’.
The situation in the entire building materials market is a bit scary. Virtually all the materials have seen price increases, differing only in degree. The prices of cables and Harvey roof tiles have gone up by 138 percent and 93 percent respectively to N58,000 per ton and N11,000 per length, respectively, up from N16,000 and N5,700 respectively in June 2016.
The price of Aluminum roofing sheets (0.55mm) has gone up from N1,550 per length in June 2016 to N2,500 per length, representing a 61 percent increase in just 12 months. The price of coloured emulsion paint has risen by 41 percent to N12,000 per bucket, up from N8,500 in June 2016.
Electric sockets have also recorded significant price increase. According to our checks, the price of 13A socket has moved from N950.00 in 2016 to N1,200 as at June this year. Furthermore, the price of a distribution board for electrical fittings has gone up by 13 percent to N45,000 per unit, up from N40,000 in 2016.
A cement seller at Pako building materials market, Oke Afa, Isolo in Lagos State, who identified himself simply as Idris, confirmed to our reporter that the Dangote brand of cement sells for between N2,650 and N2,800 depending on location. He explained that there are price differentials with other cement brands.
Idris further explained that virtually all building material prices have gone up because of inflation and exchange rate. “Majority of these materials are imported”, he said, adding that even though cement is manufactured locally, foreign exchange and inflation have also affected its production.
Until May 2017 when inflation rate came down to 16.25 per cent (year-on-year), it had peaked at 18.72 percent, which impacted negatively on commodity prices. The 16.25 percent is a fall on the April rate of 17.24 per cent. This figure represents the fourth consecutive decline in the rate of inflation since January this year, when it was 18.72 percent, the highest rate since 2005. Though economists say inflation is currently moderating on a year-on-year basis, it is yet to reflect on commodity prices.
Gbadebo Adejana, MD/CEO, Realty Point, affirms building material prices have really gone up, stressing that even the prices of sand and labour have gone up. “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 which is now very expensive at N3,000—N5,000 per day”, he said.
Adejana whose company is developing Cedar Luxury Homes in Lekki, Lagos, noted that the situation in the market has led to an interesting development that has both positive and negative sides. He explained that “finishing is today the elephant in the room for developers” because its high cost has forced many developers to deliver shells to buyers.
“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 heads, they put the buyers at the receiving end. So, while it is positive for the developers, it is not so for buyers”, he empasised.
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