Housing has long been regarded as a fundamental measure of both economic stability and social welfare in any country. A nation’s housing sector mirrors its broader economic health, revealing the balance or imbalance between income growth, construction activity, and public policy. In Nigeria, housing performs this role with striking clarity.

It reflects not only the nation’s economic aspirations but also its struggles with inflation, foreign exchange volatility, and infrastructural inefficiencies.

Over the past decade, the country’s urban housing market has become one of the most inflation-sensitive sectors, experiencing steep rises in land values, construction costs, and rent levels.

Today, the cost of housing in Nigeria’s major urban centres of Lagos, Abuja, and Port Harcourt has moved beyond the reach of many households and even some institutional investors. Developers are caught between escalating costs of materials and fluctuating financing terms, while potential homeowners and tenants face rising rental burdens.

What was once a pathway to economic security has, for many, become a source of financial anxiety. The phenomenon of housing inflation—where property prices and rents increase faster than general income growth—has emerged not merely as a housing market issue, but as a systemic economic challenge with far-reaching consequences.

Several interlocking factors explain the persistent rise in housing costs. First, macroeconomic instability—especially exchange rate depreciation—has significantly driven up the cost of imported building materials such as cement, tiles, roofing sheets, and electrical fittings.

Even locally sourced materials have not been spared, as producers pass on higher energy and logistics costs to consumers. Second, land acquisition and titling remain cumbersome and expensive in Nigeria, often consuming up to 30 per cent of total project costs. The bottlenecks associated with obtaining land titles, coupled with multiple taxation and high consent fees, have further constrained supply.

In addition, population growth and urbanisation pressures continue to outpace housing supply. Nigeria’s urban population is expanding at an estimated rate of over four per cent yearly, and cities like Lagos attract hundreds of new residents daily in search of economic opportunities.

The result is excess demand for limited housing stock, which naturally pushes prices upward. These conditions are worsened by limited access to affordable mortgage finance, high interest rates, and underdeveloped construction financing systems.

All these factors collectively form the architecture of housing inflation, creating a situation where both new developments and existing properties experience relentless price escalation. For investors, this appears profitable on the surface, but beneath lies a deeper structural problem: valuation uncertainty.

A common misconception is that rising property values automatically translate into investor gain. However, in an inflation-distorted market, this assumption does not always hold true. When prices increase faster than real income or productive value, investors face a valuation bubble—properties may appear to appreciate on paper, yet lose real worth when adjusted for inflation or currency depreciation. Developers, therefore, struggle to strike a balance between rising construction costs and attainable market prices.

For instance, a project initiated at N2 billion might, due to inflation, require N2.8 billion by completion, but the market may only absorb properties priced up to N2.5 billion. This mismatch produces financing gaps and threatens profitability.

Similarly, buyers and tenants experience affordability crises, while financial institutions confront difficulties in risk appraisal. In extreme cases, such distortions lead to project abandonment, rental defaults, and asset devaluation.

Here lies the crucial role of valuation—not merely as an administrative requirement but as a strategic mechanism for risk mitigation. Valuation serves as the compass by which investors, banks, developers, and policymakers navigate the uncertainty created by inflationary pressures.

Professional valuation provides a structured basis for understanding the underlying dynamics of property markets. By accurately estimating the value of real estate assets, valuation ensures that stakeholders make informed decisions regarding acquisition, investment, and disposal. In an inflationary economy, this function becomes even more vital.

A sound valuation practice distinguishes real growth (reflecting increased utility, productivity, or income potential) from nominal price escalation (driven by inflation or speculative behavior). This distinction helps investors avoid overpaying for properties or over-leveraging assets. It also aids lenders in determining appropriate collateral values, thereby protecting the financial system from exposure to over-valued assets.

Moreover, periodic valuation updates allow property owners and developers to track asset performance and make evidence-based adjustments to investment portfolios.

For instance, a commercial property in Victoria Island, Lagos, may show an apparent 30 per cent price increase in a year. However, after valuation adjustment for inflation and rental yield trends, the real growth might be closer to eight a critical insight for long-term investors.

Beyond the private sector, valuation is indispensable for public policy and regulation. Governments rely on accurate valuation data for property taxation, mortgage regulation, and urban planning. When valuation figures are unreliable, fiscal planning suffers, and the housing policy framework becomes distorted.

For example, inflated property assessments can discourage investment, while undervaluation leads to revenue leakage in property tax systems.

By contrast, a robust valuation framework enhances transparency and equity in public revenue generation and supports sustainable urban development. It allows government agencies to monitor market trends, identify speculative activities, and design effective interventions such as affordable housing schemes or rent control policies. In essence, valuation bridges the gap between economic management and built environment governance.

Despite its importance, the valuation profession in Nigeria faces substantial obstacles. The first is the absence of reliable property market data. Many transactions occur informally without proper documentation, making it difficult to access comparable sales data, an essential input for valuation accuracy. Second, inconsistent market information and weak institutional databases limit the precision of analysis.

Economic volatility also complicates valuation work. Frequent exchange rate adjustments, energy price hikes, and inflation distort cost models. A valuer who estimates replacement costs today may find the same project costing 20 per cent more within a few months. Such unpredictability challenges even the most experienced professionals.

There is also the issue of professional standardisation. While the Nigerian Institution of Estate Surveyors and Valuers (NIESV) and the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) have made significant efforts to enforce uniform methodologies, compliance gaps persist, especially among practitioners operating outside formal institutions. These inconsistencies sometimes lead to valuation discrepancies, eroding investor confidence.

Another critical challenge is technological adaptation. The global valuation industry is rapidly embracing automated valuation models (AVMs), data analytics, and Geographic Information Systems (GIS) for better accuracy and efficiency. However, adoption in Nigeria remains slow due to limited digital infrastructure and inadequate training. As a result, many valuation processes are still largely manual, leaving room for subjectivity and human error.

Addressing these challenges requires a multi-level strategy. Professional bodies such as NIESV must continue to promote research, training, and collaboration with international institutions to enhance methodological robustness. Continuous professional development should be encouraged, focusing on data science, econometric modeling, and property analytics.

Government support is equally critical. By establishing national property data repositories, simplifying land registration processes, and improving transparency in land transactions, authorities can help build the foundation for reliable valuation.

The ongoing efforts to digitise land registries in Lagos and Abuja, for instance, are positive steps that should be replicated across all states.

Furthermore, integrating valuation into the broader framework of financial risk management is essential. Banks and mortgage institutions should routinely update collateral valuations to reflect market realities, while Real Estate Investment Trusts (REITs) must adopt independent valuation reviews to ensure investor protection.

Technology will also play a transformative role. The deployment of automated valuation systems, powered by big data and artificial intelligence, can enhance accuracy, reduce turnaround time, and improve transparency. Mobile-based data collection tools can make valuation more responsive and accessible, especially in emerging markets and peri-urban areas.

Ultimately, the fight against housing inflation is not one that can be won through monetary policy alone. It requires a synergy between sound economic management and professional valuation practice. Inflation may be cyclical, but its adverse impact on housing markets can be contained through consistent valuation, prudent investment, and data-driven regulation.

Valuers stand at the intersection of economics, finance, and real estate development. Their expertise can help investors see beyond nominal figures to the real value that underpins sustainable investment. When properly institutionalised, valuation acts as a shield against volatility, safeguarding investors, guiding developers, and ensuring that government policies rest on a foundation of factual evidence.

In a rapidly urbanising Nigeria, where millions aspire to home ownership and developers seek viable returns valuation is not just a professional service; it is an economic necessity. As the nation grapples with housing inflation and the associated risks, strengthening the valuation profession offers one of the most practical and sustainable pathways to restoring confidence, stability, and fairness in the property market.

Omotiloye is an Estate Surveyor and Valuer based in Lagos.