Inflation is lifting Lagos property values while making housing less affordable
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Rising construction costs and a weaker naira are pushing up Lagos property prices and rents even as many tenants and buyers are priced out, a Lagos estate surveyor argues.
Inflation has become one of the most powerful forces reshaping Lagos' property market, raising the cost of renting, buying land, building and maintaining property, according to an analysis published by The Guardian Nigeria. Estate surveyor and valuer Babatunde O. Ajani writes that the cost of cement, steel, roofing materials, tiles, sanitary fittings, labour and transport has risen sharply, leaving developers with little choice but to pass part of the increase on to buyers.
Currency depreciation compounds the pressure because many construction materials and fittings are imported or depend on imported components, so exchange-rate movements quickly feed into building costs. Developers are caught between rising costs and the shrinking purchasing power of buyers, prompting some to postpone projects, reduce their scale, or shift towards luxury housing where higher costs can be recovered, the column says.
The rental market tells a similar story. Landlords face higher costs for repairs, security, utilities and replacing damaged building components, and many respond by raising rents even though tenants' incomes are not rising at the same pace. Ajani describes this as the contradiction at the heart of Lagos' housing crisis: property is becoming more valuable while housing is becoming less affordable.
He argues that rising naira prices do not necessarily translate into real wealth gains. If a property doubles in value while inflation and the cost of rebuilding it rise by the same margin or more, the owner may not be better off in real terms. Prime locations such as Ikoyi, Banana Island, Parkview Estate, Osborne Foreshore Estate, Victoria Island and parts of Lekki continue to attract wealthy buyers and investors, while values in many middle-income and emerging areas remain constrained by affordability.
High interest rates add another obstacle, the column notes. Inflation tends to keep monetary policy tight, making borrowing expensive: affordable mortgages remain largely unavailable to prospective homeowners, while developers face higher financing costs that are ultimately passed on to buyers or tenants. Ajani says Nigeria's housing problem is not simply a shortage of buildings but also a shortage of affordable finance.
He calls for policies that deliberately reduce the cost of housing production, including better infrastructure in emerging communities, faster planning approvals, fewer multiple taxes, support for local production of building materials and wider access to affordable housing finance, alongside new growth corridors with roads, transport and water.