Friday, 22nd September 2023

Fear grips housing market over increase in cement, iron bar prices

By Bertram Nwannekanma and Victor Gbonegun
12 April 2021   |   4:26 am
Another increase in prices of cement, iron bar and other building components was made recently, which could become stumbling block for low-cost housing in the country.

Dangote cement

Another increase in prices of cement, iron bar and other building components was made recently, which could become stumbling block for low-cost housing in the country.

The Guardian gathered that the high cost of building materials has affected house affordability and housing projects, leading to variations in costs.

For instance, the price of cement has increased to about 20 per cent between March and April as a bag which sold for N3, 000 at the beginning of March now goes for N3, 600.

In the southeast and northern parts of the country, the price is as high as N4, 000 per bag. The increase has also impacted cement-based products like blocks and concrete rings among others.

A dealer in Ikeja, Mr. Sunday Ilesanmi, said the recent price increases came from the factories as major producers hinged the development on cost of production. He stressed that the poor state of economy coupled with rising inflation impacted heavily on the construction industry.

According to him, the high cost of cement will invariably impact on affordable housing production as developers may be forced to increase the price of their houses.

This, he explained, might dim the hope of home ownership, especially among low-income earners and first time homebuyers.
Ilesanmi urged the Federal Government to develop a framework that could bring down the cost of cement production as well as the prices, stressing that if such decisions were taken, it could boost the construction sector, as cement remained a major ingredient for affordable housing.

The Guardian further gathered that the increase has caused limited housing supply in some areas in Lagos and Ogun states as dealers have taken advantage of the prevailing situation.

A dealer at Pakuro, Mayowa Adigun, attributed the increase to dwindling supply as a result of reduction in production. But another major dealer at Ibafo, popularly known as Alhaji Marouf, expressed optimism that prices will likely normalise.

Also, speaking on the development, a cement distributor at Ibafo, Mr. Tunde Odeh, said the increase was temporary and may likely normalised when full activities return at the factories.

Odeh, a distributor of the two major brands, however, lamented that sales have been low as construction works are still at low ebb because of prevailing economic situation.

Similarly, the price of a ton of 12mm iron rod rose from N270, 000 to N335, 000, which is about 29 per cent increment.

Meanwhile, timber dealers blame the hike on high cost of transportation and other sundry costs. The Chief Executive Officer, Kaytise Ventures Limited, Mr. Alatise Kazem Olakanmi, said the price is climbing after the initial slump because of inaccessibility to forests due to rainy season.

Also, the prices of reinforcement has sent shivers on the shoulders of private developers, leading to low patronage and confusion among contractors, who had scheduled quotations of the materials in dissonance to current market realities.

The Guardian market survey last weekend revealed an increase in prices of iron bars, which are considered as critical ingredient to building construction due to shortfall in quantity or quality of the products could shorten longevity of buildings as well as trigger collapse of structures.

The price of iron bars has also increased in the past two months, worsening the woes of developers, who are already suffering from declining revenues.

For instance, the price of 12 and 16mm Iron rods move from N260, 000 to N340, 000, while 10, 25, and 20mm were sold at N355, 000 while 8mm was at the rate of N270, 000 per ton.

A dealer in Lagos, Mr. Sola Adewuyi, explained that the latest increase is also from the factory, adding that the manufacturers didn’t give any reason for the development.

Also, plywood price is rising up to N15, 000, because of foreign exchange rate. The price of others dropped significantly.
For instance, the price for 2×6 hardwood ranges between N1, 200 and N1, 500, depending on whether it is manually or engine sawed.

Also, the price for 2×4 goes between N750 and N1, 000 while softwood 2 x 3 used for formworks goes between N450 and N500. The price of panel door is between N10, 000 and N13, 000 depending on if it is Mahogany or Milana.

The implication is that the country’s housing deficit which, by 2016 World Bank report, was estimated at 17 million units keeps expanding as supply falls far short of demand.

The country’s housing deficit, according to Roland Igbinoba, CEO, Pison Housing Company, is both quantitative and qualitative, explaining that besides the insufficient stock, some of the houses available are in sub-standard condition

Olakanmi said the government’s 300,000 housing project may be feasible because materials can be assembled in bulk while cost can be reduced.

He, however, urged the government to increase access to funding for timber merchants as well as improve on the security challenge in the country because of the high risk involved in the timber business.

A developer and Managing Director of Propertygate, Adetokunbo Ajayi, noted that building construction is more of an amalgam of various inputs, like cement, reinforcement, doors, including labour and consultancy services. He observed that when those components are going up, the final output would also be expensive.

“When your end products are becoming very high, then affordability becomes an issue to people, who want to purchase your products. “ It is better for everybody when prices come down,” he added.

Ajayi stressed that apart from the prices of cement and woods, the price of other inputs has gone up like granite, sand, paints, and raft pipes used for scaffolding. Sharp sand, he noted, moved from N65, 000 to N80, 000, while the labour cost rose from N2, 500 to N3, 500.