A new housing market report has issued a serious warning that Nigeria’s housing and construction sector is critically exposed due to its heavy reliance on imported building materials. With an estimated 70% of construction inputs sourced internationally, the market remains highly vulnerable to foreign exchange (forex) pressures, global supply shocks, and escalating input costs, thereby deepening the country’s housing affordability crisis.
Key Risks of Import Dependence
Nigeria possesses abundant local raw materials for construction (like aggregates, timber, and laterite), yet the capacity for local processing and production remains severely limited. This structural flaw exposes the country to three major economic risks:
1. Forex Volatility
Because most crucial materials (like reinforcement steel/iron rods, aluminum, finishing tiles, and certain chemical additives for cement) must be purchased in foreign currency, any devaluation or instability of the Naira directly translates into soaring local prices.
-
Direct Impact: Research indicates a strong positive correlation where a unit increase in the exchange rate can lead to significant corresponding increases in the price of building materials.
-
Cost of Projects: Fluctuations in forex rates are a predominant cause of project delays and abandonment, as construction costs spiral beyond initial budgets.
2. Global Supply Chain Disruptions
The high import reliance means Nigeria’s housing pipeline is sensitive to external events, such as international conflicts, port closures, and shipping crises. These disruptions not only delay project timelines but also introduce steep increases in freight and logistics costs, which are then passed directly to Nigerian developers and ultimately to the consumer.
3. Escalating Costs and Housing Affordability Crisis
The combined effects of forex instability and supply shortages have caused a dramatic escalation in the prices of essential building materials, making housing unaffordable for the majority of the population.
-
Price Surge Example (Iron Rods): The cost of iron rods (10mm–16mm) saw a massive surge. After rising sharply in 2023, the price escalated further, reaching ₦1,600,000 per tonne or more in 2024, representing a 100% increase from 2023 levels in some cases. As of October 2025, prices for 10mm–16mm rods were around ₦1,040,000 per tonne.
-
Construction Costs: For many urban projects, material costs now account for an estimated 50% to 70% of the total cost of building a house. This has inflated the final cost of housing beyond the reach of low- and middle-income earners, deepening the national housing deficit, which is estimated to be over 17 million units.
Recommendations for Stabilisation
To mitigate the risks and address the severe housing deficit, the report recommends a multi-pronged approach focused on enhancing local self-sufficiency:
-
Enhancing Local Production: Providing targeted support, affordable financing, and tax incentives to indigenous manufacturers to increase the production capacity of key items like steel, aluminum, and finishings.
-
Policy Consistency: Implementing stable and consistent government policies that encourage investment in local manufacturing hubs and discourage unnecessary importation.
-
Promoting Local Materials: Encouraging research, development, and the utilization of quality-assured, affordable local building materials (like laterite, timber, and innovative local composites), which are currently underutilized due to issues like doubtful durability and social acceptability.
-
Optimizing Supply Chains: Reducing bureaucratic impediments and improving logistics infrastructure to lower the cost of transporting domestically produced materials.
The structural issues within the building materials market severely compromise the efficiency and affordability of the construction sector’s projected growth trajectory, making the pivot to import substitution an economic imperative.
