Economy
Inflation worsens housing deficit
By ADEBAYO OBAJEMU
More Nigerians are facing desperate situations in the rental obligation as a result of high cost of living while those who had plans for their own houses may have abandoned the idea, following astronomical increase in the prices of building materials.
BusinessHallmark’s market’s investigation and interactions with contractors, builders’ merchants and consultants revealed the astronomical increase in the costs of building materials by 60 percent.
Otitoloju Farinde, chairman, Nigeria Institution of Surveyors, Ifo Ward 3, told this newspaper that the rising cost of building materials is a palpable threat to housing for all policy of the government. Nigeria has a total of 23 million housing deficit and it is believed the housing sector can add almost five percent to the gorss domestic product, GDP.
He said that the increasing cost of building materials such as cement, which is an important part for housing construction, has sent apprehension that prospective property developers may compromise quality in their projects.
“Many unscrupulous developers who are mainly interested in profit may take advantage of these rising prices to compromise on quality, and this kind of things can lead to building collapse”.
He warned that unless government did everything possible to put infrastructure in place such as good road, incentives for cement manufacturing, and enough security, the situation would continue to get worse.
Many stakeholders and experts in the industry have expressed apprehension that the vision of lower construction costs might have been a mirage, as the inflationary development has already triggered a ripple effect in popular markets, with prices going up by about 60 per cent.
The hike in products is not divorced from the nation’s annual inflation rate, which climbed to 18.1 percent in March, according to NBS.
Investigations by BusinessHallmark has shown that the prices of major building construction components like cements, roofing materials, earth works, doors and iron rods have skyrocketed.
At building materials market at Cement bus stop, Ikeja, Mile 2 and other areas prices have shot up.
For instance, the price of Alu-zinc rose from N18, 000 in January to N19, 500 in April 2021.
Similarly, the price of a 50 kilogramme of cement which was sold for N2, 700 about six months ago is now at N3, 500 ,while the price of Iron rod, is now between N280, 000 – N290, 000 per tonne.
Also, the price of door is now N11, 000 from N9, 000, about six months ago, while roofing sheet price for Jumbo is N19, 500 and N27, 000 for Cameroon aluminum. The price of granite went up to N190,000 per ton while the price of sharp sand goes for N80, 000 er ton and the price of nail goes N10, 000 per bag.
The cost of cement, iron rods, tiles and Plaster of Paris (PoP) cement, among others have risen by over 60% between March 2020 and March 2021. For instance, the cost of steel, which was at N234,000 per tonne as of March 2020, had shot up to N380,000 at the end of March 2021. This significantly stands for 62% increase within the period under review.
While Dangote Cement increased from N2,600 to N3,800 (though it is sold at N3,600 in some areas in Lagos), Lafarge Cement and BUA Cement increased from N2,400 and N2,250 to N3,600 and N3,250 respectively within the same period.
The cost of super white cement increased from N2,500 (25kg) to N3,700, and the cost of high-quality white cement (40kg) also increased from N4,000 to N6,500. The cost of gravel increased from N80,000 to N140,000; that of 8mm diameter and 25mm diameter (imported) increased from N234,000 and N245,000 to N330,000 and N380,000 respectively.
Doors are not left out in the hike. Costs of Flush door (high quality), panel door and Turkish steel door (1,500 x 2,100) also rose from N35,000, N40,000, N165,000 to N60,000, N75,000 and N235,000 respectively. Experts have blamed the hike on the persistent depreciation of the naira and the rising cost of other building materials.
Mr. Juwon Abegunde, a fellow of the Nigerian Institute of Builders, stated that the built industry is part of the general economy, adding that there was no way the downward trend in the economy would not have impact on the construction industry. He therefore, attributed the development to high interest rate, inflation, increasing exchange rate and scarcity of forex in the country.
To Martin Inyang, an Estate Developer, the rising prices could be blamed on the ban of imported cement in the country. He told BH that though banning imported cement is good as it would encourage local producers, he warned that what the government ought to have done was to have instituted gradual and phased ban, since the local manufacturers were unable to produce enough cement to meet the demand and this contributed to the rising cost of the product.
According to him, there was scarcity of the product in the open market, which fueled the rush by buyers.
Omofolayan Toyin, a cement dealer at U-Turn, Abule Egba area stated that the current hike is a disservice to construction business, stating that it would affect the housing delivery process as contractors and developers will need to review their quotations. She said prices of the building materials are too exorbitant, adding that there was no justification for the latest development from the manufacturers.
In another light, Emmanuel Orji, a property developer in Alagbado told this newspaper that, “Although prices have increased slightly, but that many dealers hoard products and capitalise on that to maximise profit. They deliberately hold the products for some time, thus creating artificial scarcity, and then they raise the price.”
He, however, blamed the increase on the economic realities in the country, which have affected all commodities. According to him, the cost of living has gone up, including food prices and building materials.
Henry Ajulo, another Cement dealer said a lot of factors coalesced and led to skyrocketing prices. One, our roads are bad, and our trucks are being attacked on the way as you can see because general insecurity. A lot of man hours is lost, all this we add to the cost”, he said.
A major distributor at Sango Ota hinted at the latest trend of arbitrary hiking of prices, saying that middle men, often complain that they could not get products for weeks and then hike the prices, without understanding that the manufacturers have not increased the price.
Sesan Obaniyi, the distributor said until these middle men have a change of heart such arbitrariness in price hiking will continue.
Building materials have been playing an important role in the construction industry; they are those materials put together in erecting or constructing structures. In fact, no field of engineering is inconceivable without their use.
Building materials contribute immensely to the quality and cost of housing, from what is used in the foundation to the materials for roofing and finishing, while the building materials industry is an important contributor to the national economy of any nation as its output governs both the rate and the quality of construction work.
Additionally, building materials constitute the largest single input in housing construction with about 60% of the total housing expenditure used for the purchase of building materials.
Ordinary Nigerians who have desire to build their house have also expressed worries.
James Falodun, a civil servant said with the way building materials have continued to rise, “I am beginning to fear whether I will ever actually own a house. In the next five years, I will be sixty, so where will I retire to.”
This fear is also expressed by Janet Anyanwu, a banker. ” Let me not deceive you the way things are going many Nigerians may never own a house. Prices of building materials are beyond the reach of ordinary Nigerians.”
