Nigeria’s construction sector faces severe cost pressures, driven by macroeconomic instability and structural inefficiencies. Inflation, exchange rate volatility, high transportation costs, and energy prices have sharply increased production expenses, exacerbating housing unaffordability. These challenges, compounded by rising construction costs, have slowed development despite the country’s massive housing deficit—estimated at 28 million units, requiring ₦21 trillion to address.
Housing has become unattainable for most Nigerians. In Lagos, a modest one-bedroom apartment now rents for over ₦1,000,000 annually—nearly double the national minimum wage of ₦70,000 per month. Homeownership, already out of reach for millions, is slipping further away as prices outpace incomes.
“Without intervention, economic pressures will continue locking Nigerians out of affordable housing, deepening inequality and social instability.”
The crisis stems from multiple systemic failures. Limited mortgage financing, policy gaps, and urban inequalities have turned shelter, a basic necessity, into a luxury. Without intervention, economic pressures will continue locking Nigerians out of affordable housing, deepening inequality and social instability. This analysis explores the forces driving this crisis and its human cost.
Read also: Nigeria’s housing deficit deepening, experts warn
Nigeria’s housing time bomb: The demand and supply gap
Nigeria’s housing sector is in crisis, with a gaping shortage of affordable homes pushing millions of desperate citizens into slums and informal settlements. This has further worsened poverty, deepened inequality, and left a significant portion of the population without basic shelter. This problem, which is acutely pronounced in the urban cities, has reached such an alarming state that urgent intervention is needed to address and provide a long-lasting solution.
The 28 million housing deficit reported by Nigeria’s Federal Mortgage Bank further exposed a deep structural failure in meeting the country’s shelter needs. Despite this overwhelming demand, fewer than 100,000 housing units are delivered annually, far short of the estimated 700,000 units required to keep pace.
Rapid urbanisation and population growth—projected to surpass 400 million people by 2050—have intensified pressure on housing infrastructure, especially in major cities like Lagos, Abuja, and Port Harcourt. But the problem is not just about numbers; it’s about affordability.
The surge in construction material prices has made homebuilding and purchase unattainable for many Nigerians, leading to suppressed housing demand and stalling the broader real estate sector, a key contributor to economic activity.
While the government has introduced measures—such as lowering import levies on select building materials and encouraging local production—these efforts remain insufficient. Without decisive action to make materials more accessible and reduce development costs, the housing crisis will deepen.
The widening gap between housing demand and supply, compounded by rising costs and limited financing options, demands urgent, collaborative interventions to ensure affordable and inclusive housing for Nigeria’s growing population.
Affordability crisis
Nigeria’s housing crisis has reached alarming levels, with a severe shortage of affordable homes forcing millions into slums. The 28 million housing deficit highlights systemic failures, as fewer than 100,000 units are built annually—far below the 700,000 needed. Rapid urbanisation and a booming population, set to exceed 400 million by 2050, are intensifying pressure, particularly in cities like Lagos and Abuja.
Affordability remains the core challenge. Soaring construction costs have priced out most Nigerians, suppressing demand and stalling real estate growth. Despite government efforts—such as reduced import levies and local production incentives—progress remains inadequate to meet the scale of need.
Without urgent intervention, the crisis will worsen. Bridging the gap requires coordinated action to lower material costs, expand financing, and accelerate housing delivery. Affordable shelter is not just an economic issue but a fundamental right that demands immediate, sustainable solutions.
As more Nigerians are pushed into the informal housing markets, poverty has exacerbated undermining efforts to improve their living conditions. Those in lower income brackets are left to survive in environments where health, security, and opportunities for upward mobility are severely restricted.
The cost of building in Nigeria
Building a home in Nigeria has become increasingly out of reach for most citizens, largely due to inflation, foreign exchange volatility, and systemic inefficiencies. As illustrated in recent data, the cost of critical building materials has surged dramatically. For instance, the price of a 16mm iron rod soared from ₦2,000 in 2023 to ₦18,269 in 2025—an over 800 percent increase. Similarly, cement now costs ₦10,200 per bag, nearly triple the 2023 price. These jumps are directly linked to FX instability, with imported inputs becoming costlier due to naira devaluation.
Access to land is another major bottleneck. Complicated titling processes, opaque land registries, and high acquisition fees—particularly in urban areas—significantly slow down development. In states like Lagos and Abuja, the cost and time required for approvals and permits are exacerbated by overregulation and bureaucratic inefficiencies, further inflating project costs.
Although government initiatives like the National Housing Fund (NHF) and Family Homes Fund aim to promote affordable housing, their impact remains minimal. Limited funding, slow disbursements, and lack of nationwide reach have constrained their effectiveness. On the private side, developers continue to focus on high-end projects due to higher profit margins, sidelining the mass-market housing need.
Furthermore, the absence of innovative and affordable housing financing instruments—like long-tenure, low-interest mortgages—prevents low- and middle-income Nigerians from participating in homeownership. Without coordinated interventions to address material costs, land access, and financing constraints, the dream of affordable housing will remain elusive for millions. For Nigeria to close its 28-million-unit housing gap, it must confront both the market realities and policy failures underpinning the high cost of building.
BDI Commentary
Housing is more than shelter—it is a human right and a cornerstone of national development. Yet, for the majority of Nigerians, the path to homeownership remains blocked by rising construction costs, inaccessible land systems, and a financial system that fails to serve the average citizen. The Central Bank of Nigeria’s Household Expectations Survey (July 2024) starkly captures this reality: Nigerians now spend 54.9 percent of their income on food and essentials and 30.2% on transportation. What’s left is simply not enough to afford a roof over their heads.
Compounding the crisis is income inequality. As Finance Minister Wale Edun rightly pointed out in February 2024, only 5 percent of Nigerians have more than ₦500,000 in their bank accounts. Years of economic policies that favoured a narrow elite have deepened the housing divide. Government reforms, while commendable, must now prioritise inclusive housing finance models that reach the informal sector and low-income earners.
BusinessDay Intelligence believes the time for piecemeal interventions is over. Nigeria needs bold, systemic reforms. These include digitising land registries, reducing approval bottlenecks, incentivising affordable housing developers, and expanding access to long-tenure, low-interest mortgages.
If Nigeria is serious about sustainable development and social equity, housing must move to the centre of its economic agenda. Now is the time to act.
