Soaring building materials prices signpost crisis in housing sector

…as iron rod price rises 75% to N250,000/ton in 3wks

The ultimate  dream of many Nigerians to own their own homes is becoming more far-fetched by the day, as prices of building materials rise astronomically, following a cost-push inflation that has driving commodity prices beyond the reach of most consumers.
Iron rods, which serve to reinforce concrete structures, are leading the pack of building inputs whose prices have hit the roof, as BusinessDay checks reveal that a ton of 8mm iron rods which only three weeks ago, sold for N150,000, now sells for N250,000 representing a 75 percent price increase.
Other reports indicate that apart from the inflationary effect, this increase is as a result of a growing trend of  limited competition, in which the market is shared by a small number of sellers who take advantage of their peculiar positions to unduly raise prices, for the purpose of profiteering.
Cement, which is another major building component, has seen a significant price increase and according to William Adekoya, the site engineer at Our Saviour’s Anglican Church building project in Lagos, the price of a 50 kilogramme Dangote brand of cement, which was selling for N1,500 a few months ago, has gone up about 80 percent, to N2, 250 (factory price).
A dealer at a building materials market in Isolo, who identified himself simply as Idris, confirmed to our correspondent that the Dangote brand of cement sells for N2,250 factory price, but that depot (off factory) price was N2,500 explaining that the difference was for “transportation, loading and off-loading expenses”.
What this means is that a prospective builder who needed just N75,000 to buy N50 bags  of cement to mould and get 1,000 blocks to build a four-bedroom bungalow, now needs close to N150,000 to buy cement alone and thereafter, source for more money to buy sand, water and pay for labour.
“Though the increase in the price of sand is a bit negligible at N45,000, up from N40,000 per tipper load,  that is not the same with labour”,  said Debo Adejana, MD/CEO, Realty Point, developers of Cedar Luxury Homes in Lekki, Lagos, who said that labour was now very expensive at N3,000—N5,000 per day.
Our checks reveal further that the story is not better with those who want to buy already moulded blocks for building as, the price of a 9-inch (hole) sandcrete block has gone up 29 percent to N220 per unit, up from N170 per unit in December 2016.
The wider implication of this, according to close market watchers, is that it is shrinking job opportunities for both artisans and building professionals because some developers are now closing sites, hoping that prices might drop when government, as expected, relaxes some of its macro and monetary policies.
A recent survey conducted on the building materials market by Northcourt Real Estate, a research, advisory and consultancy firm, shows that there has also been a 41 percent increase in the price of aluminum roofing sheets from N1,550 to N2,200 per length.
“Our survey reveals an interesting development that has both positive and negative sides”, says Tayo Odunsi, Northcourt CEO, who explained in a telephone call that the cost of “finishing is today the elephant in the room for developers” because their high prices have forced many developers to deliver shells to buyers.
“By adopting this method, the developers are saving themselves the trouble of spending much on materials and increasing their cost of construction which also pushes up house prices beyond the reach of many.
“But while they succeed in saving their heads, they put the buyers at the receiving end. So, while it is positive for the developers, it is not so for buyers”, Odunsi stressed.
According to the survey, the price of white emulsion Dulux paint, which was N22,000 per ‘bucket’ has gone up 22 percent to N27,000 while the coloured variant of the product has seen a 13 percent price increase to N8,500 per gallon (4litres), up from N7,500.  The price of a split unit air-conditioner has also risen 53 percent to N100,000 per unit, up from N65,000 in August 2016.