THE COST OF BUILDING MATERIALS RISE BY OVER 60%
High interest rates, inflation, increasing exchange rate and scarcity of the forex are all contributing factors to the progressive hike in the cost of building materials. Most developers rely on imported building materials, but unfortunately have been hit hard by the persistent depreciation of the naira and the rising cost of building materials.
Essential examples of such hikes are on core building materials such as sand. A survey revealed that the price of a tipper load of sand in some states, increased from N65,000 in March to N76,000. Similar hikes have been seen in the cost of toilet fittings in Lagos, Rivers, Kano, Abuja, Anambra, Ondo and Oyo states. The price of Tryford water closet and wash hand basin sets increased from N34,000 as at February to N40,000.
These hike trends can be seen in the price of wood, iron roof sheet, floor tiles, and paint.
The cycle is simple but unfortunate. With inflation, the exchange rate is affected and the cost of importations increases. Thereby causing an increase in the cost of building for developers.
According to Nairametrics, “If a building costs you N40milion to construct and inflation sets in, it may cost N60million to complete. You may borrow the N60million and the interest will still be on it. This means the cost of construction has increased, and the interest on the loan is higher.”
The immediate past chairman, Nigerian Institution of Estate Surveyors and Valuers, Lagos chapter, Rogba Orimalade said the overall monetary policy of government has not helped.
He said, “We couldn’t separate inflation from the monetary policy that is discouraging saving. When there is a high cost of building materials, one would expect that it would slow down in real estate development but because the monetary policy hasn’t made people to save, people are forced to invest in real estate to protect the value of their currency.”
