Rising Building Material Costs Put Fresh Pressure on Nigeria’s Real Estate Market

Rising building material costs are putting increasing pressure on the viability of real estate projects in Nigeria, forcing developers to reassess budgets, pricing and construction strategies as the cost of delivering new housing continues to climb.

The rising cost of construction is affecting one of the most important aspects of the property market, the ability of developers to deliver homes at prices that buyers and tenants can afford.

For developers, the pressure goes beyond the price of building materials. Higher input costs are coming alongside expensive financing, land acquisition, labour, energy, transportation and other development expenses, making it increasingly difficult to maintain the financial viability of projects.

Building materials account for a substantial portion of construction expenditure. As a result, significant changes in the prices of cement, steel, roofing materials, fittings, tiles, glass and other inputs can quickly change the economics of a housing project.

When costs increase after a development has already been planned or launched, developers are faced with difficult decisions.

They may have to absorb some of the additional costs, revise specifications, slow down construction, postpone projects or increase selling prices.

Each option carries implications for project profitability, delivery timelines and the ability of the market to absorb the completed properties.

Affordable housing faces greater pressure

The challenge is particularly significant for projects targeting low- and middle-income households.

Developers operating in this segment have limited room to increase prices because affordability is already one of the major constraints affecting effective demand for housing.

Recent industry reports have similarly linked rising prices of cement, steel, sand, wood and other construction inputs to delays, scaling down and, in some cases, suspension of housing projects.

Cement prices have been particularly important to the cost pressures facing developers.

Recent industry data cited by the Real Estate Developers Association of Nigeria showed that the price of a 50kg bag of cement, which was around N7,500 in the final quarter of 2025, increased to between N9,000 and N10,000 early in 2026 and subsequently reached between N11,500 and N15,000 in several parts of the country.

Other construction materials have also recorded increases.

A recent report by Panterra Real Estate Group found that prices of some key structural and finishing materials had risen by hundreds of percentage points from their 2019 levels, with iron rods and other materials among those experiencing substantial increases.

Developers reassess project viability

The effect of rising material prices is not limited to individual construction inputs.

Developers must account for the combined impact of materials, land, finance, labour, infrastructure and logistics when determining whether a project can be completed profitably.

Industry stakeholders have said this is making it more difficult to predict the final cost of developments, particularly for projects with long construction periods.

A project that appears financially viable at the planning stage can become more expensive to complete if the prices of major inputs rise significantly during construction.

This creates additional uncertainty for developers, particularly when properties have already been marketed or sold at prices based on earlier cost estimates.

Developers may therefore have to review their construction specifications, procurement strategies and project timelines to manage the impact of changing prices.

Impact on homebuyers and tenants

The pressure on developers can eventually affect consumers.

Where developers are unable to absorb higher construction costs, some of the additional expenses may be reflected in the prices of newly completed properties.

This can make homeownership more difficult for households that are already struggling with limited incomes and high financing costs.

The rental market can also be affected because landlords and property investors may seek to recover higher development and maintenance costs through rents.

Recent reporting has linked rising development costs in major Nigerian cities to increases in residential rents, particularly in Lagos and Abuja.

For prospective homeowners, the combination of higher property prices and expensive mortgage financing can further widen the gap between household incomes and the cost of purchasing a home.

Housing supply could also be affected

Another concern is the potential effect of rising construction costs on the volume of housing delivered to the market.

If developers postpone projects or reduce the scale of planned developments because of rising costs, fewer new homes may enter the market.

This is particularly significant for Nigeria, where demand for housing continues to grow as the population expands and more people move into urban centres.

The pressure on supply could become more pronounced if affordable housing projects are disproportionately affected because such projects generally operate within tighter price and profit margins.

Industry stakeholders have therefore continued to call for measures capable of stabilising the building materials market and supporting housing delivery.

Imported materials add to the pressure

The cost of building materials is also influenced by Nigeria’s exposure to imported construction products.

A Panterra report noted that between 60 and 80 per cent of some finishing materials, including tiles, sanitary ware and window fittings, are imported. It linked the price increases to factors including currency depreciation, import exposure and rising production costs.

Changes in foreign exchange conditions can therefore affect the cost of materials and components that developers depend on.

For developers, this can make budgeting more difficult and increase the risk of cost overruns, especially on projects that require imported finishing materials.

Industry calls for intervention

The Real Estate Developers Association of Nigeria has called for greater engagement between government and stakeholders across the building materials value chain to address price instability.

REDAN President, Oba Akintoye Adeoye, has warned that the combined effect of rising construction costs is putting financial pressure on developers and contributing to project delays, scaling down and suspension.

The association has also raised concerns that persistent cost increases could make homeownership more difficult for Nigerians and potentially encourage the use of substandard materials by individuals seeking to reduce construction expenses.

Recent industry reports have similarly called attention to the need for greater local production and measures that can reduce dependence on imported construction inputs.

Real estate sector faces a difficult balance

Nigeria’s real estate sector is therefore facing a difficult balance between rising development costs and the need to keep homes within the reach of buyers and tenants.

Developers must continue to manage land, financing, labour, materials, infrastructure and logistics while responding to changing purchasing power.

For the wider housing market, the challenge extends beyond developers.

Higher construction costs can affect housing supply, property prices, rents, mortgage affordability and the pace at which new developments are delivered.

As Nigeria continues to require more housing, the stability and affordability of construction inputs will remain an important factor in determining how quickly developers can bring new homes to the market.

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Experts Call for End to Rivalry in Building Industr

Experts in Nigeria’s real estate and construction sector have called for more cooperation and unity among professionals to solve the many problems facing the industry.

They said rivalry and lack of teamwork among builders, architects, engineers, and other professionals are slowing down growth in the sector.

The call was made at the two-day Builders’ Conference and Annual General Meeting of the Nigerian Institute of Building (NIOB), Lagos State chapter. The theme of the event was “Collaboration, Cooperation and Inclusiveness for Successful and Sustainable Building Delivery.”

Some of the problems discussed include substandard building materials, weak laws, building collapses, poor training of artisans, rising prices of materials, and the use of unqualified workers.

Vice President and Chairman, Real Estate Developers Association of Nigeria (REDAN), South West, Dr. Kunle Adeyemi, said professionals must work together to move the industry forward.

“We can’t continue working separately. The situation in the building sector is so bad that some construction quotations expire within a week due to price increases,” he said.

Adeyemi urged government to enforce the National Building Code in all states and encourage schools to teach students how to work together on real-life building projects.

Chairman of the event and Managing Director, Megamound Investment Limited, Mr. Olumide Osunsina, said successful projects require cooperation between government, communities, and the private sector.

“No single person or group can build a sustainable project alone,” he said, adding that government should make approval processes easier and promote partnerships that include sustainability goals.

Chairman of NIOB Lagos, Mr. Thomas Adeoye, said the theme was a reminder for everyone in the building sector to “think strategically, build responsibly, and collaborate deeply.”

Also, President of NIOB, Mr. Bimbo Kolade, represented by Third Vice President, Dr. Emmanuel Aladeloba, said building is a team effort that needs the input of many professionals.

Chairman of the Council of Registered Builders of Nigeria (CORBON), Dr. Samson Opaluwah, represented by the Registrar, Mr. Adetunji Adeniran, said the council is already partnering with other organizations to improve professional skills and promote inclusiveness in the industry.

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Nigeria’s housing shortage is worsening as the country’s building materials industry falters under high energy costs, foreign exchange scarcity, and rising competition from cheap imports. Experts warn that unless urgent reforms are delivered, the housing deficit—already estimated at over 28 million units—will continue to grow.

What was once expected to be the backbone of affordable housing delivery is now crumbling. The consequences are visible across major cities, with developers abandoning projects midway and families forced to spend more of their income on rent. A bag of cement that cost about N5,500 in 2023 now sells for over N10,000, while iron rods have skyrocketed from N2,000 to almost N18,000 within two years.

“The problem goes beyond inflation,” said housing policy analyst Dennis Okafor. “We are dealing with an industry collapse. If energy is unstable and imports dominate the market, every project will stall and costs will continue to rise.”

Nigeria’s steel sector, once anchored on the massive Ajaokuta Steel Mill, has been reduced to less than five percent of its intended capacity, while rolling mills across the country have shut down. In the ceramics industry, over 80 percent of tiles and sanitary ware are now imported as factories in Kogi, Ogun, and Plateau close their doors. Glass and aluminium producers struggle with erratic operations, relying almost entirely on imported coils.

The paint industry presents a mixed picture. Large companies such as Berger and CAP Plc remain active, but smaller players have shut down due to high borrowing costs and reliance on imported inputs. “Eighty percent of our raw materials are still imported,” explained Mr. Jude Maduka, Executive Director of the Paint Manufacturers Association of Nigeria. “Whenever the naira slides, the cost of paints goes through the roof, and developers either halt projects or increase prices.”

According to Mr. Abdulhakeem Huthman, President of the Building Materials Producers Association of Nigeria, multiple taxation, poor infrastructure, and soaring energy bills are the biggest threats. “Our members in steel, ceramics, paints, and glass are being squeezed from every side. High energy costs alone make it nearly impossible to remain competitive,” he said.

The government has announced plans to revive the industry through the creation of Building Materials Manufacturing Hubs across the six geopolitical zones. These hubs are expected to provide shared infrastructure, energy access, and fiscal incentives such as tax breaks and duty waivers. Officials believe this could cut production costs and boost local output, but stakeholders remain cautious.

“What we need is delivery, not declarations,” Okafor stressed. “If these hubs succeed, they can transform housing delivery. If they fail, we will repeat the cycle of abandoned promises.”

Some industry players are trying to adapt. Paint companies are sourcing more local inputs like calcium carbonate, while small entrepreneurs are recycling plastics into roofing tiles and paving blocks. Developers are also experimenting with laterite bricks and interlocking blocks, which use less cement and are cheaper to produce.

Former BUMPAN president, Rufus Akinrolabu, believes Nigerians must rethink their preference for imported materials. “With proper technology, laterite bricks can last for decades, yet people dismiss them as old-fashioned,” he said. “We cannot solve a 28-million-unit housing deficit by importing everything. Necessity should be our mother of invention.”

Despite these innovations, the collapse of the industry continues to reflect in rising rents and property prices. In Lagos, a two-bedroom flat that sold for N15 million in 2023 now costs up to N35 million, while rents in areas like Lekki have doubled within two years.

For many Nigerians, the dream of home ownership is slipping further out of reach. As Huthman puts it, “Every time a factory closes or a project is abandoned, it is not just an industry problem—it is a social emergency.”

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The initiative was announced by Mr. Kehinde Osinaike, General Manager of the Lagos State Physical Planning Permit Authority (LASPPPA), who emphasized the importance of obtaining planning permits before commencing any construction or development activities.

Osinaike explained that the amnesty period offers property owners a chance to regularize their structures without immediate penalties, aligning with efforts to promote organized and sustainable urban growth in line with the Lagos State Master Plan.

“Planning approval is not only a legal requirement but also a tool for orderly development. It ensures that homes, schools, healthcare facilities, businesses, and roads are integrated into a balanced and functional urban environment,” he said.

He further noted that compliance with planning regulations not only enhances property value but also reduces exposure to legal and structural risks for developers and buyers.

Speaking on the benefits of proper documentation, Mr. Olarinde Iyiola, Head of LASPPPA’s Monitoring and Compliance Unit, added that buildings constructed without permits may pose safety concerns and negatively impact the environment.

“Buildings that meet planning standards are more likely to be structurally sound, safer for residents, and more attractive to investors,” Iyiola stated.

The state government urged residents and developers to take advantage of the amnesty window, stressing that after the grace period, stricter enforcement actions would be taken against violators.

Officials emphasized that the goal is not punitive, but rather to bring all developments in line with the city’s master plan and ensure a safer, more livable Lagos for all.

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The call was made at the recent launch of Edge Facility Managers in Lagos.

Victor Alonge, the First Vice President of the Nigerian Institution of Estate Surveyors and Valuers, highlighted the importance of legal titles in accessing finance.

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He explained that without a legal title, property owners cannot use their property as collateral to secure loans from banks. Alonge emphasized the need for state governors to take the issue seriously and improve the land titling system.

According to Alonge, about 94% of property in Lagos State currently does not have legal titles. He pointed out that while Lagos State has made some progress in improving its land titling system, other states like Nasarawa, Ogun, and Oyo lag behind.

Chudi Ubosi, the Managing Partner of Ubosi Eleh & Co., echoed Alonge’s sentiments, noting that many property owners are reluctant to obtain formal titles due to a lack of trust in the government and a fear of additional taxes.

READ ALSO: Estate Developer Accuses FCDA of Illegally Demolishing Property in Abuja

Ubosi emphasized the need for the government to educate and build awareness among the public about the benefits of having a formal title to land.

Peju Fatuyi, the Chief Executive Officer of Edge Facility Managers, stated that the purpose of the launch was to raise public awareness about activities within the facility management space.

She stressed the importance of addressing the issue of land titling to unlock the full potential of the real estate sector in Lagos State.

The stakeholders agreed that streamlining the land titling process and improving public awareness about its benefits are crucial steps toward addressing the property crisis in Lagos State and ensuring sustainable growth in the building industry.

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Operators in the building industry have called on the government to subsidize social housing to bridge the affordability gap. They made the call at the International Federation of Nigeria’s 50th anniversary celebration themed “Repositioning the Real Estate Industry for the Future: Ethics, Affordability and Sustainability,” in Lagos recently.

Odunayo Ojo, the Managing Director of UACN Property Development Company Plc, said that affordability in the housing sector, which is synonymous with social housing, cannot be delivered by the private sector. He explained that the capital required to deliver social housing is too high for private sector developers, especially given the high cost of cement and other building materials.

“Social housing has to be subsidised, as it is done everywhere in the world that I know,” Ojo said. “The subsidy is not what you go through the private sector to discuss because we in the private sector do not get a subsidy.”

Ojo also pointed out that the definition of minimum wage in Nigeria is N30,000, which is not enough to afford the cheapest house in the country. He said that until the government addresses the structural issues of income level, there will be no affordability in the housing sector.

“Until we deal with the structural issues of income level, there would be no affordability,” Ojo said.

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Lanre Sonubi, the Head of Marketing and Corporate Communications at Knight Frank Nigeria, suggested that the government could invest funds obtained from the removal of fuel subsidy into social housing. He said that the government could also learn from the example of Egypt, where the government is the major driver of social housing. In Egypt, the government provides subsidies for mortgages, low-interest loans, and even the actual cost of housing units.

“Funds obtained from the removal of fuel subsidy could be invested in social housing,” Sonubi said. “What the government is doing in Egypt is a good example, of which they are the major drivers.”

Sonubi also suggested that the government could redirect some of the funds it is currently investing in other areas of the economy into social housing. He said that this would help to solve the problem of housing affordability and enable average income earners to own their own homes. He also called on state governments to take up their own responsibility in providing social housing.

“Some of the funds the government is trying to redirect into some other areas of the economy can be redirected into social housing,” Sonubi said. “This can be put into the housing sector by the government to subsidise homes, hence solving a real problem to the extent that an average income earner is able to own a house. Also, it should not be the Federal Government alone, the state governments also need to take up their own responsibility.”

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Gladstone Opara, the President of FIABCI-Nigeria, said that there is no proper definition of affordable housing in Nigeria. He said that affordable housing means providing houses that are affordable for everybody, and it is not something that the private sector can do alone. He called on the government to see social housing as a social responsibility and subsidize it for both the rich and the poor.

“Affordable housing means providing houses that are affordable for everybody, and it is not what the private sector can do,” Opara said. “The government should see it as a social responsibility.”

Source: Punch Newspaper

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