Ever wonder why housing prices keep going up? Many tenants are getting stuck out of the gate.
Now, the economy has pushed everyone to the wall.
Landlords are increasing house prices, and tenants are complaining.
According to Businessday, housing prices are so high because of the fluctuation in Naira and rising inflation.
For some reasons, input material prices were one of the first to reflect the exchange rate crisis that led to the price increase last year.
As the economy tightens, both landlords and tenants are feeling the pressure.
Landlords are raising rents to keep up with rising costs, while tenants struggle to afford these higher prices.
This growing condition has led to widespread frustration.
The depreciation of the Naira has made it more expensive to import construction materials, which has had a direct impact on building costs.
Since most materials used in real estate development, such as cement, steel, and tiles, are either imported or heavily reliant on foreign exchange rates.
For some reasons, the price fluctuations in the currency market immediately affect housing costs.
Inflation?
Well, inflation has also played a critical role.
As the general price level of goods and services rises, property developers and landlords adjust their prices to reflect the increasing costs of maintenance, labor, and utilities.
As we know.
In 2023, Nigeria experienced one of its worst inflationary periods, and the housing sector was not spared.
The moment construction costs surged due to exchange rate volatility, property prices followed suit.
For tenants, this has been a difficult moment.
Many who could previously afford decent housing now find themselves priced out of the market.
Some have been forced to move to less expensive areas or settle for lower living standards.
The simple truth remains.
Unless inflation is controlled and the Naira stabilizes, housing prices may continue their upward trend, leaving more Nigerians struggling to secure decent homes.
The Economic Significance of Housing Prices
For some reasons, we have obsessions with beautiful homes. Even though we have no reason for this, but it’s inevitable.
We always wonder: How much is the house worth? How beautiful is the house?
People love to buy or rent beautiful houses, with each other vying to prove that they are worth more than the next guy.
Everyone needs shelter, we all need a place to put our heads. Whether the place is a multi-million, multi-billion, or a few thousand Naira.
Every place serves its true purpose. Which makes housing a fundamental human need.
I got to realize its significance extends far beyond providing shelter.
It solves problems that cater for the overall individual well-being.
As sweet as it sounds, there is a problem.
The rising housing prices…
While rising housing prices may seem like a sign of economic growth, they pose greater threats for the average Nigerians.
Let’s take a look at the contribution to GDP…
As for now, the Nigerian real estate sector accounts for a substantial portion of the country’s GDP, with its contribution fluctuating between 5% and 7% annually.
Which means construction activities, property transactions, and mortgage-related financial services all contribute to economic growth.
However, when property prices rise too rapidly without a corresponding increase in income levels, the benefits become limited to a small fraction of the population.
And that’s true.
How about,
Employment standard
With thousands of workers forced to resign from their jobs.
Unable to keep up with the non-increased salary, increased rents, and expensive standard of living.
Because of this, everyone has shifted their attention to a more affordable location just to keep up with their rents.
In search of cheaper housing, a growing number of people are relocating to more budget-friendly areas just to avoid being overwhelmed by expenses.
Despite public outcry, inflation in Nigeria shows no signs of slowing down.
Instead, it worsens by the day, eroding the purchasing power of workers and making it increasingly difficult for families to maintain their standard of living.
Food prices have skyrocketed, transportation costs have doubled, and rent hikes have made decent housing almost unaffordable for the average worker.
This financial strain has led to a mass shift in priorities.
While some have chosen to downgrade to smaller apartments, others have opted to leave city centers for suburban or rural areas where rents are lower.
Unfortunately, these relocations come with trade-offs, such as longer commuting hours and fewer job opportunities.
The alarming part is that the number of people struggling to keep up with these price hikes is growing faster than the population itself.
Each day, more individuals find themselves unable to cope with the relentless rise in living costs.
Leading to tough choices about where and how to live.
Without immediate intervention to stabilize inflation and improve wages, this cycle of financial distress will continue.
If salaries remain unchanged while expenses keep rising.
Many Nigerians will be forced to make even more drastic lifestyle changes to survive in an economy that seems to be working against them.
Housing Dilemma: Buy or Rent?
With the cost of rent skyrocketing, many Nigerians are beginning to consider owning a home as a long-term solution.
Rather than paying millions in rent each year.
The idea of taking out a mortgage and using personal savings to secure a home seems like a smarter investment.
On paper, it offers financial security and stability.
Owning a home means no more rent hikes or sudden evictions.
Right?
However, in reality, the mortgage system in Nigeria is far from affordable.
Interest rates on home loans are significantly high, making it difficult for the average worker to qualify for a mortgage without stretching their finances beyond capacity.
Even those who manage to secure a loan often find themselves struggling with repayment, as the monthly deductions eat deep into their budgets.
For some people, the dream of buying a house remains out of reach.
The cost of acquiring a property, even with a loan, still demands a substantial upfront payment that most people cannot afford.
Additionally, unpredictable economic conditions make it risky to commit to a long-term financial obligation like a mortgage.
With inflation rising and salaries remaining stagnant, taking on such a huge debt could lead to financial distress rather than security.
As a result, a large percentage of Nigerians are left with no choice but to continue renting, despite the financial strain.
The housing crisis is no longer just about availability but affordability.
Without policies that promote accessible mortgage plans and lower interest rates.
Having a property will remain a luxury for only a privileged few.
While the majority continue to struggle with expensive rents and uncertain living conditions.
The Growing Housing Supply Deficit
Housing in Nigeria has become a growing concern as thousands of people actively search for homes to buy or rent.
However, finding a decent and affordable place to live is becoming increasingly difficult.
Here’s why.
Because the demand for housing far outweighs the available supply.
This leaves many prospective tenants and buyers in prolonged uncertainty.
The reality is that while people continue to migrate to urban areas in search of better opportunities.
The availability of housing has not kept pace with this rapid population growth.
And one of the major issues fueling this crisis is the severe housing supply deficit.
With limited properties on the market, many individuals and families are forced to wait for months before securing a home that meets their needs.
For example, in big cities like Lagos and Abuja, where housing demand is high, the competition for available homes is intense.
Many people are either priced out of the market due to skyrocketing rental rates or left with substandard living conditions because there are simply not enough decent houses available.
The lack of sufficient housing can be traced back to several key factors.
One major challenge is the high cost of construction.
Building materials are expensive due to inflation and currency fluctuations, making it difficult for developers to build affordable housing at a large scale.
Additionally, access to land is another barrier.
Many properties are tied up in legal disputes.
While others remain undeveloped due to bureaucratic bottlenecks and government policies that make land acquisition tedious and costly.
As a result, both low- and middle-income earners struggle to find suitable housing options.
While the wealthy can afford luxury apartments and gated communities, the majority of Nigerians are left with limited choices.
Many have no option but to settle in overcrowded apartments, makeshift structures, or distant areas with poor infrastructure and long commuting times.
The effects of this housing shortage extend beyond just shelter.
People who are unable to find housing in the city centers often have to relocate far from their workplaces, leading to increased transportation costs and lost productivity.
Additionally, families forced into overcrowded living conditions face health and safety risks due to poor ventilation, inadequate sanitation, and a lack of basic amenities.
No doubt…
Addressing this issue requires urgent intervention from both the government and private sector.
Policies that encourage affordable housing development, such as subsidizing building materials, reducing bureaucratic hurdles in land acquisition.
And offering low-interest mortgage options, could help ease the crisis.
Public-private partnerships can also play a crucial role.
Bridging the supply gap by ensuring that new housing projects cater to a broader income range rather than focusing solely on luxury developments.
Until these solutions are put in place, the struggle to find housing will continue to be a major problem for many Nigerians.
Without a significant increase in supply, the waiting period for securing a decent home will only grow longer.
And the dream of affordable, comfortable housing will remain out of reach for millions.
The rise in inflation
A single bag of cement, which was once relatively affordable, has now reached an all-time high.
Similarly, other essential building materials such as iron rods, tiles, and wood have experienced drastic price increases.
This surge in construction costs has caused property values to skyrocket.
Properties that were once priced at ₦50 million are now selling for as much as ₦80 million, making owning a home increasingly out of reach for many buyers.
Contrary to popular belief, developers are not the cause of this price hike.
This is true…
The reality is that they are struggling just as much as buyers.
The rapid inflation affecting the Nigerian economy has disrupted the entire real estate industry.
Developers, who initially planned their projects based on certain cost estimates, are now forced to deal with unexpected price surges.
Many have had to revise their budgets multiple times, often leading to stalled projects or increased selling prices to compensate for higher expenses.
One of the major factors driving this crisis is the volatility of the Naira.
The depreciation of the local currency has made it more expensive to import raw materials, further increasing the financial burden on builders.
Even locally sourced materials are not exempt from these rising costs, as inflation continues to erode the purchasing power of businesses and individuals alike.
For property buyers, the situation is even more alarming.
With property prices increasing at an unsustainable rate, many aspiring landlords find themselves priced out of the market.
Even those who have saved diligently to buy a home are realizing that their money is no longer enough to secure the property they initially planned for.
Mortgage rates are also high, making financing options less attractive.
As a result, potential buyers are left with limited choices either to postpone their purchase, forget about their expectations, or continue renting indefinitely.
Developers, on the other hand, are caught between trying to maintain profitability and ensuring that their properties remain affordable.
The rising cost of labor, coupled with the increasing expenses of raw materials, leaves little room for price reductions.
Some developers have resorted to cutting costs by using alternative building techniques or more affordable materials.
But these compromises often raise concerns about the long-term quality and durability of the structures being built.
The government has a critical role to play in addressing this crisis.
Policies that help stabilize the economy, control inflation, and reduce import dependence for construction materials could significantly ease the pressure on developers and buyers.
Providing incentives for local manufacturers to produce more affordable materials and improving access to low-interest housing loans can also help make real estate more accessible.
Until these issues are addressed, the cost of property ownership in Nigeria will continue to rise.
Making it even harder for average Nigerians to afford a home.
If inflation remains unchecked, the dream of property ownership will remain just that, a dream, out of reach for millions who aspire to own a place of their own.
Conclusion
The benefits of higher housing prices are largely concentrated among developers, investors, and the elite.
While ordinary Nigerians struggle to secure decent housing.
For Nigeria’s housing market to truly support economic growth, strategic reforms are needed.
Without these interventions.
Rising property prices will continue to be a barrier to economic inclusivity rather than a driver of broad-based growth.