Nigeria’s deteriorating economic situation is detrimental to various sectors, including the real estate market and its associated supply chains.
This influence is profoundly shaping the economy of the sector in the first quarter of 2024, as more renters struggle under the burden of rising prices in the real estate market, leading individuals, households, and businesses to confront uncertainty.
The steep surge in the foreign exchange rate to N1600/$ has been a significant setback for the real estate sector, significantly affecting supply chains and compelling contractors and property buyers to renegotiate contractual agreements due to soaring prices of reinforcements.
Among the hardest hit are individuals and households residing in rented accommodations, who are now grappling with steep rent hikes, particularly in suburban areas where tenants face over a 50 percent increase over the past year.
This is compounded by the combined impact of exchange rate fluctuations, rampant inflation, volatile currency devaluation, and the removal of petrol subsidies, all of which have sent commodity prices skyrocketing.
Many tenants recount similar stories of landlords significantly raising rents, citing surging building material prices, inflation, and maintenance costs.
The price of cement has skyrocketed to N7,000, alongside hikes in the prices of other construction materials, forcing property developers to slash construction activities by more than 50 percent as various businesses within the sector continue to endure severe price shocks amid the deteriorating economy.
Similarly, there have been sharp increases in the prices of other building materials, particularly rods, or reinforcement. For instance, 8mm rods, previously sold at N255,000 per tonne, now command N518,000, while 10mm rods have risen from N442,000 to N520,000. The prices of 12mm and 16mm rods, which were once N446, have surged to N515,000. Moreover, 20mm and 25mm rods, previously sold at N442,000, now fetch up to N530,000, depending on location.
The price of paint, another vital building component, has also surged, with a 20-litre container now costing between N10,900 and N35,000, depending on the brand and location, compared to the previous price of N8,000. Retailers and distributors are now selling for between N12,500 and N45,000.
Coupled with dwindling disposable incomes, the prices of building materials, especially cement and reinforcement rods, have surged by 70 percent, reflecting the repercussions of the current economic disruptions.
In Conclusion, it is obvious that the burden of these rising costs that House owners face are being passed to tenants who bear this in high rental costs which is why the Lagos State Government has decided to penalize Landlords guilty of charging exorbitant Rent. Other state governments might have to do same or provide more affordable housing options for the citizens.
