Rising cost of building materials and labor drives up house prices and rents – Property – The Guardian Nigeria News – Nigeria and World News

Building materials and labor costs jumped again in the real estate sector following rising inflation and the exchange rate in the economy, causing potential builders to fear even worse times. hard to come.

Already, manufacturers are passing on rising raw material costs to their customers, adding to concerns that inflation, which rose to 15.63% in December from the 15.4% recorded in November 2021, could exert pressure additional on housing.

The Guardian found that building materials such as cement, steel, finishes and labor have seen a significant increase in their prices, leading to higher development costs for commercial skyscrapers, offices and other buildings.

Prices for essential building components like sand, blocks, roofing sheets, tiles, paints and lumber have seen an increase of more than 30% in the past few months across the country.

For example, the price of a 50 kilogram bag of cement is between N4.200 and N4.600. The official exchange rate is N415, while the black market rate fluctuates between N560 and N570. Most building materials importers claim to have imported their products at black market rates.

It has been found that most construction materials are still imported, so the rise in the exchange rate compounds the woes of property developers.

Rising material prices are causing developers to consider whether or not to initiate new projects that have not yet started for residential and commercial construction.

Rising costs have also put hopes of becoming potential homeowners by Nigerians in limbo. About 60% of the total cost of constructing buildings is spent on materials while the remaining 40% is spent on labor. Currently, development has affected rental prices in major cities, with landlords increasing their rent by 50%.

According to the Royal Institution of Chartered Surveyors (RICS), “increased global demand in the construction sector, combined with the multiple and complex impacts of the pandemic and logistical challenges, has resulted in unprecedented shortages, delays and , finally, an increase in the prices of materials and labor throughout the economy.

“Construction productivity has largely recovered from the initial shock caused by the pandemic and, in some cases, significant efficiency gains have been made thanks to new work practices.”

Experts, who spoke to The Guardian, said government intervention was needed to reduce or stabilize the cost of housing. They also called on the government to encourage the local manufacture of building materials.

Timothy Nubi, professor of property management at the University of Lagos, said 60% of construction materials for low-income housing and 80% of materials for uptown areas such as Ikoyi and Victoria Island depended on imports . “The price will gallop depending on the exchange rate and inflation in the country,” he said.

Nubi, who lamented the disappearance of timber manufacturing enterprises, said, “Until we produce materials locally, the cost of construction would remain high by up to 500%. This should not shock anyone. »

He said that would mean there would be no affordable housing and the cost of construction would be very high. “As we have a high construction cost, the mortgage system will not work. Many people will not be able to afford mortgages.

“Builders will start using cheaper and lower quality materials imported from some parts of the world, which will lead to buildings collapsing,” he said.

According to the founder and director of the UNILAG Center for Housing and Sustainable Development (CHSD), there are fewer
the government can do to stop the situation because responding to housing demand takes time.

He asked why Nigerians should import iron rods after billions of naira have been invested in Ajaokuta Steel Mill, Osogbo Steel Rolling Plant and Delta Steel Company? “The failure of these projects is what we are facing now. Our former leaders mishandled them,” Nubi said.

Shelter Watch Initiative/Job Center Impact (JCI) Executive Director Segun Olutade said the cost of labor responds to the rising cost of food and other goods and services in the markets, various forms of taxes introduced by the government and associations.

While stating that the rising cost of cement, labor and other building materials will continue to rise, Olutade called on government at all levels to encourage young Nigerians, especially those who do not know or read or write, to work as laborers on construction sites.

“In addition to incentives, all forms of taxation must be abolished. A serious mobilization must be planned to encourage our young people to take over as labor on the construction sites.

“Additionally, laws should be put in place to ensure that local contractors patronize indigenous labor and artisans. Regulations ensuring that labor intensive jobs are well paid must be put in place to encourage our young people.