Buyers, tenants overstretched as rent-to-income ratio exceeds UN benchmark

Almost every day, Nigerians, especially the working class, are overstretched by rising costs of basic necessities, including food, accommodation, and, to a lesser extent, transportation.

Of these needs, accommodation is the most challenging today, as housing rents have risen sharply. For many tenants, their rent-to-income ratio has exceeded 60 percent, which is double the 30 percent benchmark set by the United Nations.

A typical rent-to-income ratio is generally recommended to be 30 percent or less of a tenant’s gross monthly income, ensuring housing affordability and financial stability.

The ratio is a financial metric that measures the percentage of a tenant’s gross monthly income that goes into rent. It is widely regarded as a crucial tool for both renters and landlords to assess housing affordability and renters’ financial health.

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In the last 24 months, Nigeria’s major cities, such as Lagos, Abuja, and Port Harcourt, have seen rents rise by 100 percent; mortgage affordability has declined considerably due to high interest rates, and a sharp drop in outright house purchases.

Oluwasegun Olamilekan, a young company executive living in one of the suburban areas in Lagos, was full of lamentation recently when he told BusinessDay his ordeals.

“I live in a two-bedroom apartment outside the city centre. I chose to live there because with what I earn monthly from my workplace, I know I cannot afford urban rent. In the last three years, I have been paying N450, 000 per annum for that apartment.

Guess what, last month, my landlord woke up one morning and told me he had increased my rent to N850,000. I thought the man was joking, but he was firm,” Olamilekan said, adding that the man’s face did not suggest he would accept a plea for consideration.

“I have accepted that in good faith, because within my neighbourhood, some landlords are demanding N1.2 million from new tenants. This is besides agency, agreement and caution fees. By the time you pay everything, you will be talking about N1.5—N2 million,” he stated.

Olajumoke Akinwunmi, Co-founder of Alitheia and chairman of Purple Group, confirmed these market realities at a real estate forum in Lagos, pointing out that, for many Nigerians, the housing affordability threshold has been shattered.

She noted that Nigeria is now a country where renters spend as much as 70 percent of their income on shelter, a stark contrast to the 30 percent benchmark recommended by the UN.

“That figure alone should jolt us. Those trying to build or buy today are facing not just barriers, they’re facing cliffs,” she said, stressing, “developers, investors, tenants, and professionals are all being tested, and what’s emerging is not merely a sector under pressure, but a system under reconstruction.”

The reality of the moment, according to her, is that an aspiring homeowner who spent years saving towards a modest equity contribution suddenly finds that same contribution is now a fraction of what’s required.

“Buyers’ dreams have been reset to zero. At the same time, developers are struggling to determine realistic end-product pricing in a market where cost inputs change weekly. Uncertainty now defines both ends of the spectrum—supply and demand,” she stated.

Increases in house rents in Nigeria are frequently attributed to expanding population, rapid urbanization, skyrocketing building materials prices, and, in some cases, landlords’ whims and caprices, often fuelled by macroeconomic swings and market sentiments.

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Although figures released by the National Bureau of Statistics (NBS) show that, as of January 2026, inflation has dropped for the 10th consecutive month, this has yet to reflect in commodity prices, including cement, whose price has risen three times in the last six months.

A 50kg bag of cement, which sold for about ₦7,500 in the last quarter of 2025, rose to between ₦9,000 and ₦10,000 at the beginning of 2026. The price has continued to climb and is now selling for between ₦11,500 and ₦15,000 in several parts of the country.

“Within the last quarter, steel prices have gone up 20 percent, sharp sand, 25 percent, and wood/granite prices have also increased, but at a slower rate. These increases are already having impact on asset prices, especially urban rents, which have risen over 100 percent.

The impact of the surging input prices is evident on housing and rent prices across Nigerian cities,” Timothy Nubi, a professor and founding director of Centre for Housing and Sustainable Development (CHSD) at the University of Lagos, noted.