Amid Nigeria’s macroeconomic turbulence, experts have identified a confluence of inflation, foreign exchange volatility, rising interest rates, and persistent housing shortages as key drivers behind the relentless surge in real estate prices.

Speaking at a real estate roundtable series themed: ‘Real Estate Pricing in Nigeria: Causes and Effects of Price Hikes’, organised by Bamigbola Consulting/BC Academy in Lagos, professionals warned that the situation has not only driven construction costs through the roof but also worsened contract disputes and increased financial risk among stakeholders.

Chief Executive Officer of Home Work Development Company Limited, Jide Adekola, lamented that the high inflation rate, especially as it affects building materials, has pushed developers into difficult positions.

“About 70 per cent of a developer’s cost is tied to materials,” Adekola said. “You pay N60 million for reinforcement today, and by the next day, the supplier is asking you to take your money back because the price has jumped by another N1 million. This uncertainty, especially for materials like cement and reinforcement, which are critical in early project stages, can completely derail a project.”

He explained that developers, in many cases, are left with no choice but to renegotiate terms with buyers, especially those who have paid a substantial portion of the property’s original cost.

“We had a case where someone had paid 70 per cent of a N400 million home, and we had to explain that due to prevailing market conditions, the remaining 30 per cent could no longer cover the balance. This creates friction, but it’s the reality, currency fluctuation and inflation have become a legitimate force majeure in project contracts,” Adekola said.

He urged financial institutions and stakeholders to partner with developers to bulk-purchase critical materials in advance, thereby shielding projects from sudden price shocks.

Also speaking at the event, Principal Partner of Dapo Olaiya Consulting, Mr Dapo Olaiya, noted that the fast-paced changes in the market have left many home buyers scrambling to close deals out of fear of further hikes.

“We’ve seen rents for a standard two-bedroom flat in the same neighbourhood rise from N3 million in January 2025 to N6 million now. This is not theory, it’s what people are experiencing,” Olaiya stated.

According to him, real estate pricing in Nigeria is deeply rooted in broader economic instability. From the skyrocketing cost of cement rising from N4, 000 to nearly N11, 000 per 50kg bag to the sharp increase in labour costs in high-demand areas like the Lekki corridor, inflation has become a key disruptor.

“Insecurity and urban migration are also contributing. Kidnappings and rural violence are pushing people toward relatively safer cities like Lagos and Abuja, which creates a supply-demand imbalance and drives up prices,” he explained.

Olaiya also highlighted structural issues in the housing sector, especially regulatory bottlenecks around title documentation and building approvals in Lagos. “In areas like Ikate, a change in government often leads to mass revalidation of approvals, with up to 50 per cent of properties lacking proper permits. The approval process itself takes a minimum of one year, so developers often cut corners to stay on schedule, ultimately passing costs to buyers,” he added.

He urged real estate players to actively manage subscriber expectations and encouraged buyers to be open to renegotiation in the light of economic realities rather than seeking outright refunds.

Olaiya said, “Developers need to be transparent, and subscribers need to be realistic. If both parties maintain open communication, the process becomes more manageable for everyone.”