Inflation reshaped Nigeria’s housing market in 2024 – Report

According to a report by BuyLetLive, inflation reshaped the country’s housing market in 2024.

It stated, ” Inflation undoubtedly reshaped Nigeria’s housing market in 2024, creating affordability challenges and altering demand dynamics. By prioritising affordable housing solutions, incentivising local production of building materials, and embracing cost-saving technologies, Nigeria can mitigate the impacts of inflation in 2025 on its real estate sector. Ultimately, a proactive approach to addressing the effects of inflation on housing demand will be essential to fostering a more inclusive, sustainable and resilient housing market for the future.”

“While inflation posed a significant challenge, it also presented an opportunity for innovation in Nigeria’s housing market. Developers are increasingly adopting cost-saving technologies such as modular construction and prefabricated materials. These methods can reduce construction timelines and costs while maintaining quality standards.

“Similarly, renewable energy solutions, such as solar panels, are gaining traction as a way to reduce utility costs for tenants and homeowners.

Energy-efficient building designs and smart home technology are also emerging trends, helping to attract buyers and renters seeking long-term savings on energy bills.”

According to the report, the real estate sector is a significant contributor to Nigeria’s economy; however, the inflationary environment threatened to dampen activity across the sector, and reducing housing demand slowed down some construction projects.

It added,” Inflation has emerged as a critical factor shaping economic and social realities in Nigeria. In 2024, the persistent upward trend in inflation highlighted the complex relationship between various economic factors, including fiscal policies, monetary policies, exchange rates, and international trade dynamics. The currency fluctuations were one of the most significant economic challenges faced by the country in 2024. The naira saw a 24.3 per cent decline against the US dollar, falling from an exchange rate of N1,413: $1 at the start of the year to N1,757: $1 by the end of November, marking the highest level in over two decades, according to the National Bureau of Statistics.

“This persistent rise has placed immense pressure on households, businesses, and entire industries, including the real estate market. As the cost of goods and services rises, housing demand faces significant disruption. From increasing construction expenses to declining affordability and shifting buyer preferences, inflation’s impact on Nigeria’s housing sector is profound and multifaceted.

“Nigeria’s inflation rate, which started at 29.9% in January 2024, spiked to 34.8% in December 2024 due to various factors. These include currency devaluation, surging energy costs following subsidy removals, and disruptions in global supply chains. This economic environment has made essential goods such as food, fuel, and building materials more expensive, squeezing household incomes and altering spending priorities. In a nation where housing shortages already pose a major challenge, an estimated 28 million housing deficit and rising inflation exacerbate an already dire situation. The ripple effects of inflation are visible in the cost of housing materials and shifting consumer behaviour.”

The report noted that inflation intensified affordability challenges for households in the housing market.

“Rising mortgage rates and escalating property prices outpaced income growth, forcing many families to downsize, delay homeownership, or struggle with increased rental costs.

“The inflation in 2024 substantially increased the costs of building materials and construction services. Core materials like cement, steel, and paint experienced price surges of over 30 per cent within the last year. For example, a 50kg bag of cement, which cost around ₦3,800 in 2022, was at an average cost of ₦7,000 in 2024. Similarly, the price of reinforcement steel increased by over 40 per cent, increasing project costs.

“Labour costs also increased, driven by the higher cost of living and energy expenses. The hike of these prices caused developers to either absorb these costs or pass them on to end users in the form of higher rents and property prices.”