Tenants’ woes worsen as house rent in Nigeria defies market logic

Progressively and on incremental basis, rent in Nigeria, especially in the big cities of Lagos and Abuja, is defying market logic, worsening tenants’ woes, and pushing household income beyond limits.

In the last 12-24 months, rents in these cities, particularly Lagos, have surged to between 200 percent and 300 percent without justifiable reasons, creating what market analysts have described as ‘landlords economy.’

In his recent study, Olusola Akinbo of PwC Nigeria revealed that a landlord in Ajao Estate, a middle-class settlement in Lagos, raised his house rent by 218 percent, while a tenant captured in an online video lamented a 300 percent rent increase in an apartment in Banana Island—Nigeria’s most exclusive and expensive neighbourhood in Lagos.

By these increases, average rent for a three-bedroom apartment in Ajao Estate now rents for between N10 million and N12 million per annum, up from N5 million per annum, while same size apartment in Banana Island has moved from between N15 million and N20 million to between N40 million and N50 million per annum.

Though Akinbo notes that these increases defy market logic, chiefly driven by a combination of economic pressures, inflation, and high demand, he does not see landlords being entirely wrong for also feeling the squeeze in the market.

Blaise Udunze, a property market analyst, agrees, stressing that across the length and breadth of Nigeria, citizens are deeply lamenting the skyrocketing rent, more so as this has become one of the fastest-rising costs of living.

According to him, an unexpected trend which has become a huge concern is that currently, apartments that were rented for N700,000 or N1 million just a few years ago are now advertised for N3 million, N5 million or even higher, without significant improvements on the property itself.

Unarguably, a good number of city dwellers are grappling with a worsening housing crisis as tenants and prospective homebuyers now spend far above the global affordability threshold on rent, with many allocating as much as 60 to 70 per cent of their income to accommodation.

The development, according to Chudi Ubosi, an estate surveyor and valuer, reflects deepening pressure in the country’s housing market, adding that it far exceeds the 30 per cent rent-to-income benchmark recommended by the United Nations for sustainable and affordable housing.

He noted that the sharp rise in rents across major cities over the past two years has significantly overstretched the finances of working-class Nigerians, forcing many to relocate to distant suburbs or cut spending on other basic needs.

An analysis of the causes of rent increases in Nigeria always points to housing supply shortage versus high demand, rapid urbanization, the country’s expanding population, and rising inflation.

Of all these factors, inflation is major. Udunze explained that inflation has significantly increased the cost of construction inputs, particularly cement, steel, roofing sheets and virtually every construction material required to build houses. The depreciation of the naira has made imported building materials substantially more expensive.

“No doubt, from recent findings, there are clear indications that there is a significant increase in the prices of building materials. Let us see the period between 2024 to 2026, Cement: N6,500 – N13,000; blocks: N600 – N1100; 30T of sand: N165,000 – N250,000; 30T of granite: N530,000 – N780,000; rebars (iron) ton: N850,000 – N1,150,000 amongst others,” he said.

Continuing, he said, “to be fair, it is a known fact that high interest rates have increased borrowing costs for developers, while land acquisition remains prohibitively expensive in many urban centres. The very question at heart is, how has this recent development significantly impacted the apartments built five years ago and beyond?”

Udunze pointed out that rent crisis is not peculiar to Nigeria, noting that, across Africa, rapid urbanisation continues to outpace housing supply.

“For this reason, Kenya has introduced ambitious affordable housing programmes aimed at expanding supply, although implementation challenges remain; this can’t be compared to Nigeria’s current situation. Ghana is not left out of the equation as it continues to battle a significant housing deficit,” he said.

He added that Ghana is also grappling with the irony of completed homes that remain unaffordable for many citizens. South Africa, despite possessing a relatively more developed mortgage market, continues to experience severe affordability pressures in cities such as Johannesburg and Cape Town.

“Nigeria’s situation, however, is intensified by its enormous population, rapid urban expansion, limited mortgage penetration and one of Africa’s largest housing deficits,” he stated.