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EFFECT OF THE COST OF BUILDING MATERIALS ON REAL ESTATE IN NIGERIA

Posted by Wale Akinlabi on June 23, 2023
A&W Blog
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The cost of building materials can have a significant impact on the real estate market in Nigeria. Here are a few ways in which it can affect the industry:

1. Construction Costs: When the cost of building materials increases, the overall construction costs also rise. This can make it more expensive to develop new real estate projects, leading to higher property prices. Developers may pass on these increased costs to home buyers, resulting in higher purchase prices for both residential and commercial properties.

2. Affordability: The rising cost of building materials can significantly impact affordability for potential home buyers. As construction costs increase, the prices of newly built homes also tend to rise. This can make it more challenging for many Nigerians to purchase properties, leading to a slowdown in the real estate market.

3. Rental Prices: When construction costs are high, developers may opt to increase rental prices to cover their expenses and achieve a return on investment. This can result in increased rental costs for both residential and commercial properties.

4. Housing Supply: Higher building material costs can make it less attractive for developers to build new properties. This can lead to a decrease in housing supply, particularly in regions where affordability is already a concern. Reduced supply can further drive up property prices, making it even more challenging for individuals and businesses to afford real estate.

5. Economic Impact: The real estate industry is a significant contributor to the Nigerian economy. When the cost of building materials increases, it can adversely impact construction activity and hinder economic growth. This can result in reduced job opportunities in the construction sector and a slowdown in related industries, affecting the overall economy.

It’s important to note that factors such as currency devaluation, inflation, government policies, and global market trends can also influence the cost of building materials and its impact on the real estate industry in Nigeria.

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