By Maduka Nweke
While all sectors of the Nigerian economy felt the scorching heat of a struggling nation, the property industry appeared the worst hit as players battled rising costs of building materials, dwindling investments and plummeting demand, forcing many to rethink their strategies in a market now defined by uncertainty and stagnation.
Faced with twin blights of cash crunch and inflation, many real estate speculators went out of business.
Inflation drove property prices to stratospheric heights, making it hard for investors to immediately recoup their investments.
In 2024, stakeholders insist that the housing crisis worsened as many low-income individuals resorted to developing shanties just to have a place to lay their heads.
For many, the sickening paradox of squalor amid a nation boasting of huge economic potential leaves little hope on the horizon.
Agwu Agwu, a retired senior civil servant and investor in real estate lamented that Nigeria possesses the potential to rank among the world’s leading economies, blessed with abundant resources and opportunities.
He, however, noted that this promise is overshadowed by the lack of critical infrastructure, such as functional roads, stable electricity, reliable water supply and effective sewage systems. He said the deficits hinder sectoral growth and drive up the cost of development, deterring potential investors and stifling progress.
He stated that across the country, particularly in many local governments and states, the poor state of infrastructure exacerbates economic challenges, creating a ripple effect on various sectors.
One notable casualty, he said, is the real estate market and its supply chains.
“As the economy faltered in early 2024, the sector witnessed unprecedented strain. Renters grappled with soaring prices, forcing households, individuals, and businesses into precarious financial positions. This instability highlights the pressing need for sustainable infrastructure development to stabilise the economy and restore investor confidence”, he added.
FX hike
The sharp escalation in the foreign exchange rate to approximately N1,450 per dollar in early 2024—and its subsequent surge to around N1,850 per dollar amidst erratic fluctuations—dealt a severe blow to Nigeria’s real estate sector. This dramatic shift disrupted supply chains, inflated the costs of construction materials like reinforcements, and compelled contractors and property buyers to renegotiate existing contracts. The resulting instability created a ripple effect that significantly dampened the industry’s overall performance.
Demand in the real estate market plummeted as economic uncertainty gripped the nation. Many potential buyers and investors hesitated to make substantial financial commitments, leading to a noticeable slowdown in market activity. Developers and property owners faced declining property values, compounding their challenges in an already fragile economy. For many, inflation further eroded returns on investment, forcing some out of the market entirely.
Despite these adversities, resilience surfaced among Nigerians, who devised creative ways to navigate the economic hardship.
However, these efforts could not fully counterbalance the crushing impact of inflation and currency devaluation. The real estate sector remained subdued, highlighting the urgent need for policy interventions to stabilize the economy and restore investor confidence.
Amid the mounting challenges in the real estate sector, many stakeholders turned to the government for solutions and relief.
In response, the federal government pledged support by assuring the Federal Mortgage Bank of Nigeria (FMBN) of legislative amendments to key housing laws.
These changes were aimed at paving the way for the bank’s recapitalisation to N500 billion, empowering it to fulfill its mandate, including providing accessible loan facilities. While this announcement offered a glimmer of hope, subsequent government actions only added to the complexities overshadowing the sector.
Instead of alleviating tensions, the government inadvertently escalated them by unveiling a housing scheme that pegged the cost of a one-bedroom apartment between N8 million and N20 million. This announcement sparked widespread public outrage, as many perceived it as an unrealistic and elitist measure that alienated the majority of Nigerians. Critics argued that such exorbitant pricing indirectly fueled corruption, forcing individuals to resort to desperate or unethical means to secure basic shelter.
Rather than bridging the housing gap and restoring public confidence, the policy highlighted a growing disconnect between the government and the realities faced by everyday Nigerians. By setting housing prices beyond the reach of many, the government seemed to deepen the socio-economic divide, leaving citizens feeling excluded and disillusioned. For a sector already grappling with economic instability, this misstep emphasized the urgent need for more inclusive and sustainable housing policies that prioritize affordability and accessibility for all.
At the recent FMBN Management Retreat held in Abuja, themed “Transformational Innovation for Sustainable Development in Uncertain Times,” the Minister of Housing and Urban Development, Ahmed Dangiwa, reaffirmed the Federal Government’s commitment to revitalizing the housing sector. As the former Managing Director and CEO of the Federal Mortgage Bank of Nigeria (FMBN), Dangiwa pledged to ensure that the bank receives top-level support to fully deliver on its mandate of providing affordable housing to Nigerians.
Despite this assurance, FMBN has long been unable to fulfill its constitutional role, particularly in granting loans to contributors of the National Housing Fund (NHF). Antiquated legislation, such as the NHF Act of 1992 and the FMBN Establishment Act of 1993, has stifled the bank’s ability to facilitate growth in the real estate sector. However, ongoing discussions about legislative amendments have offered a glimmer of hope. These reforms, if actualized, could pave the way for millions of NHF contributors to access loans for homeownership or property development, potentially transforming the housing landscape.
Yet, systemic challenges continue to undermine progress. The instability of fuel prices has been a major disruptor, affecting nearly every facet of the economy, including real estate. Unpredictable pump prices have significantly increased construction costs, forcing many developers to halt or abandon projects mid-way. Others, unable to fulfill contractual obligations, found themselves at odds with clients, leading to a surge in legal disputes. In 2024, the judiciary emerged as a crucial avenue for conflict resolution as strained relationships between developers and clients escalated.
These challenges highlight the urgent need for a holistic approach to housing policy. While legislative reforms and government promises are steps in the right direction, they must be complemented by economic stabilization measures and policies that address the high costs of construction. Only then can the housing sector achieve the growth and inclusivity it so desperately needs.
Building materials
The building materials market, a cornerstone of the housing sector, with materials serving as the foundation for construction projects of all scales, suffered terrible hiccups in 2024.
These materials vary widely—ranging from blocks, tiles, roofing sheets, and iron rods—and play different roles depending on the project’s requirements. Research indicates that building materials account for 30 to 50 percent of a project’s total cost and influence up to 80 percent of its timeline. In Nigeria, this critical market is predominantly controlled by private individuals, making it highly susceptible to market forces, particularly supply and demand, as well as the activities of private players, including middlemen.
Critics of the current system argue that the supply and pricing of building materials should not be left entirely to market dynamics, given that shelter is a basic human need, alongside food and clothing. This unregulated approach has led to significant price volatility, creating barriers to affordable housing for many Nigerians.
Industry experts attribute the escalating cost of building materials to several factors, including government fiscal policies, scarcity and hoarding of raw materials, fluctuating fuel and power prices, inadequate infrastructure, high-interest rates, and corruption. These issues combine to create a volatile market that directly impacts housing affordability and accessibility.
Chukwuka Okereke, a property developer in Amuwo-Odofin, highlights the need for Nigeria to harness local resources in the real estate sector. “Until we begin to explore and refine local raw materials for use in construction, rather than relying on expensive imported alternatives, the cost of properties will continue to rise,” he explained. Okereke further urged the government to support the ministries and agencies responsible for developing local content in the housing sector. By investing in the exploration and refinement of domestic materials, Nigeria could reduce its dependence on imports, stabilize prices, and make housing more affordable for its citizens.
Addressing these challenges, many posit, requires a collaborative effort between the government, private sector players, and industry stakeholders to develop policies that incentivize local production, regulate pricing, and ensure the sustainable growth of the building materials market.
Cement alternative
Mr. Ikenna Okonkwo, a builder, reflects on resilience during tough times, stating, “When circumstances get challenging, people find ways to survive.” Embracing innovation rooted in tradition, Okonkwo has turned to clay to mold brick blocks, bypassing the high costs of cement. “I discovered that the same clay my forefathers used was what inspired the Oyibo (Westerners) to develop cement. Before leaving Africa, they primarily used wood, bamboo, and ropes for construction. It was here they learned about clay molding and then refined and industrialized the process.”
Okonkwo’s technique of molding bricks from mud, sand, and water without cement offers a practical solution to the surging cost of construction materials. “This approach significantly lowers construction costs, enabling individuals with limited incomes to achieve the dream of homeownership. With this method, the nightmare of skyrocketing cement prices can finally become a thing of the past,” he added.
The price of cement has become a major barrier to affordable housing in Nigeria. Recent hikes by manufacturers under the Cement Manufacturers Association of Nigeria (CMAN) have caused ripple effects in the market, with prices increasing by 30 to 50 percent in just a few days. Some property developers have halted construction projects, revisited their sales plans, or sought contract variations. Reports indicate that cement brands have raised wholesale prices by over N10,200 per bag. Consequently, retail prices have surged to N13,000–N14,200 in Lagos and the Southwest and up to N15,500 or higher in Abuja and the Southeast.
Power supply to manufacturing plants has also played a significant role in driving up cement prices. Yakubu Dinbar, a cement dealer in Lagos, recounted the rapid price escalation within a few months. “In January, a bag of Dangote cement sold for N6,000. By February, it jumped to N10,000–N15,000, and by September, prices climbed further to N15,000 per bag. This unchecked inflation forced the Federal Government to convene a meeting with cement manufacturers, urging them to lower prices. However, Nigerians have learned that when the government is uninvolved, the people bear the brunt,” he remarked.
Dinbar also highlighted the connection between fuel prices and construction costs. “Everyone has been pleading with the government to reduce fuel prices, but they’ve refused. If fuel costs were lowered, it would reduce the cost of transporting goods and manufacturing, ultimately bringing down building material prices,” he explained.
These insights underscore the urgent need for policy interventions that address both the root causes of inflation in the construction industry and the broader economic instability affecting Nigerians. Supporting local innovations, stabilizing energy costs, and regulating building material markets are key steps toward making housing more affordable and accessible.
Remarkable rent hike
Tenants across Nigeria expressed frustration and despair as landlords significantly hiked rents in 2024, citing rising building material costs, inflation and the increasing expenses of property maintenance.
Speaking to Daily Sun, many tenants revealed how these rent increases worsened their already difficult financial situations.
While real estate operators often face genuine economic challenges, critics argue that greed and insensitivity have led many landlords to unfairly pass the burden onto tenants, whose “baskets” of hardship are already overflowing.
One of the most affected groups comprises tenants in rented apartments, particularly in urban areas. The soaring exchange rate and relentless fuel price hikes have driven up the cost of living, making housing increasingly unaffordable. In 2024, the cost of renting a two-bedroom flat skyrocketed, moving from five-digit annual rents to six-digit figures. Mr. Olakunle Abiodun, a returnee from Ghana, shared his experience:
“It’s hard to believe that even houses built eight years ago are now subject to significant rent increases. When you move into these apartments, you’re often the one to repaint, renovate, and replace damaged fixtures. Before 2024, you could rent a two-bedroom flat for N400,000 to N600,000 annually. Now, the same apartments cost N1,000,000 or more, leaving many citizens homeless.”
Abiodun painted a grim picture of the homelessness crisis: “You walk along the streets and see people with their belongings camped by the roadside. Others have made pedestrian bridges their homes. It’s disheartening. Some property agents exacerbate the situation by leasing the same properties multiple times at different rates, adding to the chaos and frustration.”
He highlighted how the crisis is particularly acute in city suburbs, where tenants are grappling with rent increases of over 50 percent within a single year. This sharp rise in housing costs coincides with a broader economic downturn fueled by the combined effects of a volatile exchange rate, skyrocketing inflation, naira devaluation, and the removal of the petrol subsidy. These factors have sent commodity prices soaring, leaving many Nigerians struggling to afford basic necessities.
For tenants, the weight of these rent hikes is unbearable. Many households have been forced to make drastic lifestyle changes, while others face eviction. The housing crisis has laid bare the urgent need for government intervention to stabilize the real estate market and ensure affordable housing for all. Without meaningful action, the dream of secure and adequate shelter remains out of reach for millions, deepening the socioeconomic divide in the nation.
Poor budgetary allocation for housing
The Housing Development Advocacy Network (HDAN) has criticised the Federal Government’s allocation of N88.14 billion to the Federal Ministry of Housing and Urban Development in the 2025 budget, arguing that the amount reflects a lack of commitment to addressing the nation’s housing crisis.
In a statement released in Abuja, Festus Adebayo, Executive Director of HDAN, expressed disappointment, describing the budget allocation as woefully inadequate to address Nigeria’s estimated 28 million-unit housing deficit. He argued that the allocation undermines the government’s Renewed Hope Agenda, which aims to build 20,000 housing units annually. Adebayo called for a significant increase in the housing budget to N500 billion, noting that the cost of building each unit ranges from N6 million to N10 million.
“A well-funded housing sector is a profitable investment. Unlike other ministries, housing generates returns as homes are sold, creating jobs and stimulating economic growth. At least 70% of the expenditure can be recovered, even with subsidies,” Adebayo explained.
He pointed out the stark contrast between housing’s potential economic benefits and the relatively large allocations for other sectors, such as the Ministry of Works, which received over N926 billion, and the Ministries of Water Resources and Power, which received N114 billion and N531 billion, respectively. “This disparity highlights the government’s failure to prioritize housing, despite its vast social and economic advantages,” Adebayo said.
Adebayo also expressed concern over the lack of funding for vital initiatives like the Family Homes Fund Limited and the Federal Housing Authority. However, he commended the government’s establishment of the MOFI Real Estate Investment Fund, set to launch in 2025, and pledged HDAN’s support to ensure its success.
Experts in the housing sector echoed HDAN’s concerns, warning that the current allocation is insufficient to reform the housing sector or address the growing deficit. Rising building material costs and the ongoing foreign exchange crisis further exacerbate the challenges. Adebayo urged the government to focus on developing local building materials and stabilizing foreign exchange rates to curb escalating construction costs.
HDAN also called on the National Assembly to intervene and push for an increase in the housing budget before the final passage of the 2025 budget. Adebayo stressed that such an increase would demonstrate the legislature’s commitment to tackling Nigeria’s housing shortage.
He proposed alternative strategies, including rental housing schemes with an option to buy, partially completed housing units to reduce initial costs, and site-and-service schemes that provide infrastructure, allowing citizens to build homes at their own pace. He also emphasized the importance of engaging professionals in policy implementation and ensuring the maintenance of public housing.
Adebayo urged policymakers to adopt a systematic approach to reducing Nigeria’s housing deficit. “If we aim to build 20,000 units this year, we should set a goal of doubling that next year,” he said, underscoring the need for improved oversight to ensure that allocated funds are effectively used to deliver housing units on time.