Efforts at improving the nation’s construction industry for the past few years may have suffered a setback, as property developers have recently seen an increase in the cost of materials shoot up building projects prices.
Building firms and professionals currently witnessing slow transactions in the real estate sector are now grappling with a 150 per cent rise in material prices caused by the depreciation of the naira and high exchange rates, according to an investigation by The Guardian.
Nearly 80 per cent of all materials used by the Nigeria’s construction industry are imported and costs are expected to increase further as the exchange rate now stands at N506 to a dollar. Experts are warning of dire consequences in the construction industry, if imports of building materials are left entirely to the vagaries of free market forces.
Similarly, local manufacturers of building materials such as cement, tiles, paints and iron rods have also increased prices of their products due to shortages of industrial fuel such as low pour fuel (LPFO), automotive gas oil (AGO) and natural gas.
There are fears that as building works get more expensive, homeowners may have to compromise on aspects of their project if some materials become too pricey – the cost of cement has already increased by 200 per cent, iron rods by 120 per cent and timber is up by 20 per cent. Prices of imported finishing products such as tiles, roofing sheets, sanitary wares and doors have also hit the roof.
For instance, cement price, which increased from N1500 to N2,350, has now gone up to N2,600 in Lagos area; the cost of rod has skyrocketed from N170, 000 per ton to N300, 000 and
The scenario has worsened government’s projections to reduce the nation’s housing deficits, providing affordable housing to the teeming population and encouraging homeownership through site and services schemes. Housing schemes by government agencies are now beyond the reach of average Nigerians.
Experts say, government must put in place policies that will lower materials costs. President, Nigerian Institute of Quantity Surveyors (NIQS), Mrs. Mercy Iyortyer who confirmed the development, noted that uncontrollable increase in the prices of construction materials is a big challenge on project estimates in recent times; resulting in constant upward variations of construction costs and high costs of new projects.
As quantity surveyors continue to add value to clients by closely monitoring these increase and giving professional advise, Iyortyer called on government to urgently put in place policies that will lower and stabilize construction material prices to save the industry.
Also, President, Nigerian Institute of Building (NIOB), Tijani Shuaib said the high cost of building materials has reduced the purchasing power of the prospective clients, who patronize them as estate developers.
Shuaib, who is an estate developers said: “For example, the cost of rod has skyrocketed from N170, 000 per ton to N300000, thereby making the price out of reach to people. The high interest rate from mortgage is also a factor that even when the houses are built, you cannot find buyers.
For majority of their members, who are civil servants and constitute 70 per cent of NIOB members, he said the increase is already impacting negatively on government owners occupier house scheme, which many leverage to own their homes. Many of them, he said, are backing out because they cannot pay the increase with the remaining number of service years.
President, Nigerian Institution of Structural Engineers (NIStructE), Oreoluwa Fadayomi, said the high cost of building materials has impacted severely on projects that many projects are now stalled and clients could no longer continue as a result of high cost of all the building materials.