Soaring building material prices

In the last couple of months, prices of major building materials including cement and rods have gone up more than three times, constraining construction activities, shrinking housing supply and making hope of homeownership all the more faint and distant.

Depending on the brand, the price of a 50kg bag of cement has risen from N2,500; N2,650 and N2,700 between September and October to N3,000, N3,200 and N3, 500 respectively as the case may be. Dangote brand remains the toast of the market and therefore, attracts higher price than any other.

Iron rod, another major building and construction component, now goes for between N280, 000 – N290, 000 per ton while a ton of granite now sells for N190.000. A truck-load of sharp sand goes for N80, 000 while a bag of nail sells for N10, 000.

The price of the roofing material called Alu-zinc, a galvanised steel with metal coating composed of Aluminium, rose from N18, 000 the previous month to N19, 500 per bundle. Experts note that the brand has been topping the demand for roofing sheets because of its fashionable designs and the ‘moderate’ prices.

Well-heeled consumers are increasingly pitching tent with the stone-coated variant which is currently the most expensive at N2, 500 per square metre. However, moderate spenders are settling for Aluzinc or ordinary Zinc which costs even less.

Though this is a reflection of the state of the economy, it also underpins the hopelessness in improved housing delivery and homeownership in the country. It beats the imagination that the price of cement which has over 50 percent local content could rise to where it is today.

The implication of this, in our mind, is an increase in the number of ‘homeless’ Nigerians. Since 2006 when United Nations Habitat estimated the country’s housing deficit at 17 million units, the country has been bandying that figure as though it lives in a static world that is neither increasing nor decreasing.

The wide implication of this situation is that as much as construction activities continue to shrink with diminishing opportunities for construction workers, so much will cost of construction rise, making housing, increasingly, unaffordable to many more Nigerians.

In our opinion, at no time is this situation more unacceptable than now when the country is passing through the worst of economic conditions that need a lot of economic activities leading to job creation and household income.

It has been stated, time without number, that most countries that have passed through economic recession leveraged their construction industry to reflate their economy. Nigeria can do the same, but not with the present situation in the building materials market.

We are, therefore, calling on the government to, as a matter of economic expediency, declare a state of emergency in the building and construction sector, and come up with a policy statement that would outlaw monopoly or oligopoly, where they exist, in the building materials market.

We believe that time is now for the government to consider the far-reaching intervention in the housing sector. With the hyper inflation rate in the country which now stands at 42.2 percent, material prices are going to go up much higher and this will make housing affordability a lot tougher for both the developers and home buyers.

We join stakeholders in the building industry to ask that government should give tax break and create special real estate fund. We also share the belief that time has come for the government to be bolder and more ambitious with its existing housing programmes such as the National Housing Fund (NHF) and Family Homes Funds (FHF).

The tax relief, in our opinion, should be for private developers who demonstrate capacity to deliver 500—1,000 housing units in a year. This is because we see double benefits of solving social and economic problems by providing housing for the homeless and creating employment for the jobless.

In spite of the recession, there is still need for developers to continue putting housing on the market. But we advise that, in doing that, they have to be a lot more creative and innovative in their offerings. They should realise that the days of asking buyers to make 30—50 percent deposit is over.