Increase in Prices of Building materials threaten consumer’s home ownership dream

If you ask most Nigerians what their biggest dream is, in terms of ownership of property, not few of them would likely mention that of building a house before remembering to say anything about buying a car.

This is because not few Nigerians believe that having a roof over his or her head is the biggest dream that everyone need to work hard towards, in order to achieve the dream of being called a landlord or landlady.

Unfortunately, when the issue of building a house comes up at any forum, what easily come to mind is the rising prices of building materials and the huge cost of buying a land upon which the house would be erected.

Whenever the discussion comes up, several things come to mind. Things like the somewhat unabated soaring prices of cement, sand, nails, roofing sheets, window and door frames, wood and many more.

They are such essential materials that a house cannot be said to have being completed without land and the foregoing essential building materials.

However, with the soaring prices of building materials in the recent time, such dream may not be realised.

In fact, in a fiercely competitive housing market where prices continue to skyrocket, not few Nigerian buyers increasingly believe that their dreams of homeownership are unattainable.

Not only that, those that have ongoing housing projects at hand may likely abandon the projects as prices of building materials keep soaring high.

According to analysts, these are not the best of times for potential homeowners and developers as the unprecedented rising increase in prices of building materials across the country may exacerbate the prevailing housing deficit in the low and medium income segments of the real estate market.

Given the escalating prices of building materials across markets, not few Nigerians, particularly salary earners, can still be said to have a glimmer of hope of building houses they can call their own.

To buttress the foregoing view, Price Survey embarked on by DAILY INDEPENDENT reveals that prices of various Sands in Nigeria, being an essential material needed to build a house, is spiraling out of the purchasing power of most consumers that had the dreams of being Landlords and Landladies. For instance, the cost of 7 tons of relatively smooth sand is between N16,000 and N22,000, 7 tons of plaster sand’s price range from N22,000 to N28,000, 7 tons of sticky, soft sand sells around N22,000 to N28,000, the price of 20 tons of Sharp but not very silty sand range from N28,000 to N35, 000 and the price of 20 tons of Sharp coarse averagely silty sand sells around N38,000 to N45,000 while the cost of 20 tons of sharp silty sand is from N41,000 to N47,000.

According to Mr. Ayodele Emmanuel, an Estate developer at Pakuro-Mowe, in Ogun State, “The rising price is so pervasive across markets that most developers that took loan from either rich individuals or banks to build struggle to pay back the loans and at the same time continue to battle with the unprecedented rise in prices of building materials.

“When someone borrows money from the bank to buy land, of which you know that Land is expensive, then somewhere in the middle of construction, the cost of materials shoot up and he goes back to borrow more money to complete it. That is the way it has being. It means that those that are already constructing a building project move back and forth in search of funds because they need to complete what they have started to avoid being put to shame or rather made a laughing stock. Even some appear to have abandon most of their building projects”.

On factors that might have been triggering the prices of building materials almost by each passing day, Mr. Mike Onwuegbuchulem said: “As a result of the persistent depreciation of the Naira, the cost of building materials has experienced a drastic hike between prices in year 2020 and 2021 especially for imported building materials.

“Not only that, there have been incidences of rising inflation, with businessmen across all sectors witnessing high interest rate, inefficient supply chain in the real estate sector, poor road infrastructure for haulage and importation of cement”.

With all these put together, there is no way there would be no sharp increase in the prices of building materials, like we are today experiencing”.

According Onwuegbuchulem, consumers are giving up on homeownership dream as prices of building materials keep soaring on daily basis.

He explained that someone that is struggling to feed himself and family members will not start talking about building of a house.

Besides explanations from consumers’ side, there have been explanations from manufacturers’ side, particularly on the causes of rising prices of cement. For instance, in April this year, the management of Dangote Cement Plc. explained that the price of a bag of cement from its factories and plants in Obajana and Gboko is N2, 450, and N2, 510 at Ibese.

Explaining the reason for the high cost of cements in both markets at Obajana and Gboko, the company’s Group Executive Director in charge of Strategy, Portfolio Development, and Capital Projects, Mr. Devakumar Edwin, attributed the high cost of cement in Nigeria to the global rise in demand for cement as a result of the COVID-19 crisis.

He said: “Nigeria is no exception as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in cost of construction activity.

“To ensure that we meet local demands, we had to suspend exports from our recently inaugurated export terminals, thereby foregoing dollar earnings,” he said.

He said that the company had also reactivated its 4.5million ton capacity Gboko Plant which was closed down four years ago and the company is running it at a higher cost.

“This is all in a bid to guarantee that we meet demands and keep the price of cement within control in the country.

“About 50 per cent of our costs are linked to the USD, so the costs of critical components such as gas, gypsum, bags, and spare parts; have increased significantly due to the devaluation of the Naira and VAT increase.

“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly,” he added.

He said that the company had only adjusted its transport rates to account for higher costs of diesel, spare parts, tyres, and trucks’ replacement.

He said that though, the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the open market.

Against the background of the foregoing facts on rising prices of building materials, not few Nigerians that once dreamt of owning their own houses are giving up on their dreams as there seems to be no hope in sight as the rising prices remains insurmountable. This is as the strain on construction materials has had predictable impacts on those who are already committed to the construction of their own homes.

According to Mr. Jenkins Ayebaidobamo, “When any of these costs increases, it makes it harder to provide enough to continue the construction of the building that is in progress, and even at that, those who have not even started, not to talk of owning a plot of land are scared away.”

“With the cost and supply issues related to cement, in particular, there is an urgent need for the government to intervene as people cannot continue to be tenants.

“I am sure that when the government intervenes, not just on cements, but on all materials needed to erect building, prices will begin to come down.”

Source: African Housing News

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