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 home-ownership all the more faint and distant.
As at December 2016, a 50-kilogramme bag of Dangote cement was selling for N2,200—N2,300, up from N1,600 as at August and October of that same year. Within a space of one month, the price of the product increased by N200 to N2,500. Now, it has gone up again to between N2,600 and N2,700.
The price of iron rod which, about 24 months ago, was N70,000 per ton, went up to N150,000 per ton in January this year. Presently, a ton of iron rod sells for about N250,000, representing 75 percent price increase within just 30—40 days.
Cement and iron rods are not the only materials whose prices have gone as 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.
Similarly, the price of white emulsion Dulux paint which was selling for N22,000 per ‘bucket’ has gone up 22 percent to N27,000 while the coloured variant of the product has seen 13 percent price increase to N8,500 per gallon (4litres), up from N7,500. The price of wall split unit air-conditioner has also risen 53 percent to N100,000 per unit, up from N65,000 in August 2016.
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 needs a lot of economic activities that 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 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 reconsider the 41 items banned from accessing foreign exchange from the official window for their importation. We have that this will have positive impact because as much as 46 percent of those banned items are real estate related.
Reversing that ban, we strongly believe and hope, will stem the rising cost of building materials, stimulate construction activities, improve household income and, ultimately, dilute the hash impact of the economic recession on individuals, families and organisations.