Builders abandon sites as rising costs of building materials plague construction industry

By Maduka Nweke, [email protected]

As the cost of building materials soars to unprecedented levels amidst Nigeria’s economic hardships, the construction industry is facing a crisis. The escalating prices are forcing many builders to abandon their sites, exacerbating the already dire housing shortage in major cities. With the urban population expanding rapidly and housing supply failing to keep pace, the situation is approaching a tipping point, potentially leading to increased homelessness and overcrowded living conditions.

Escalating costs of essential materials

The surge in prices affects a wide range of building materials. Items such as cement, steel rods, paints, tiles, sand, wood, sanitary wares, roofing sheets, nails, electrical fittings, and even water have all seen dramatic price increases. For instance, cement prices have jumped significantly, with distributors in Lagos predicting that prices may climb even further during the dry season due to increased demand.

A review of cement prices across major distribution outlets shows that, despite initial stability thanks to government intervention, costs have surged from around N7,500 to N8,200 for a 50kg bag to between N13,000 and N15,000. This volatility is mirrored in other building materials. The price of softwood has risen from N400 to N650, while hardwood prices have also escalated sharply. Additionally, the cost of binding wires has more than doubled, and roofing a standard three-bedroom house now costs between N1.2 million and N1.5 million, depending on materials and transportation costs.

Impact

Merckson Innocent Okoro, Principal Partner at MI Okoro and Associates, attributes the rising costs to high exchange rates and economic difficulties, which have negatively impacted the importation of building materials. He notes that many developers rely on imported materials due to the lack of locally produced alternatives, driving up costs and affecting the affordability of housing. The need to import materials results in higher construction costs, often leading developers to price their properties in dollars, despite regulatory restrictions against this practice. This practice exacerbates the housing crisis, as the high cost of development limits the number of new houses that can be built.

Kunle Awobodu, former President of the Building Collapse Prevention Guild (BCPG), highlights that the skyrocketing prices of building materials are forcing some projects to be abandoned. He warns that fluctuating prices and market forces are impacting construction budgets, often compromising the quality of materials and the overall integrity of construction projects. Awobodu calls on building professionals, homeowners, and developers to prioritize quality over cost and to adapt to the challenging market conditions.

Government’s role and future outlook

Mr. Uchendu Nicholas, a major cement distributor in Festac, reports that cement prices have stabilized at around N14,200 to N16,000 per bag, following earlier price hikes. He advocates for government intervention to address price volatility, particularly during the rainy season when construction demand typically drops. Nicholas points out that without a regulatory price control mechanism, the construction industry is at the mercy of market forces, leading to unpredictable costs and financial strain on builders.

Real estate developer McCmillan Nwose notes that the rising costs are influencing construction timelines and overall project feasibility. He emphasizes the importance of understanding the costs involved in building a duplex, including land, construction materials, and labor. According to Nwose, the cost of constructing a duplex in Nigeria can range between N37 million and N120 million, depending on various factors such as location, design, and materials used. He advises prospective builders to carefully plan their budgets, select reputable developers, and seek financing options that fit their financial constraints.

The current state of the construction industry in Nigeria, experts note, highlights the urgent need for more sustainable and cost-effective building solutions. As the cost of materials continues to rise, both individual builders and large-scale developers must navigate these challenges with strategic planning and adaptability. The collaboration between government bodies, industry stakeholders, and financial institutions will be crucial in addressing these issues and ensuring that Nigeria’s housing market can meet the growing demands of its urban population.