Renewing housing hope – The Nation Newspaper

The real estate sector showed resilience amidst high inflation and interest rates, driven by strong urbanisation, population growth and a significant housing deficit, leading to price increases and affordability challenges. Smart city focus, increased infrastructure and a rise in real estate’s gross domestic product (GDP) contribution, with projections pointing to continued growth, especially in residential markets, despite economic headwinds, shaped the industry in the year under review, OKWY IROEGBU-CHIKEZIE writes.

There may be conflicting figures regarding Nigeria’s housing deficit; but several real estate experts estimate the gap at 28 million units, stating that the nation needs 700,000 new homes annually.

Still smarting from the joy of the real estate sector displacing oil and gas to emerge as Nigeria’s third largest sector, Gross Domestic Product (GDP) and Consumer Price Index (CPI) rebasing, the sector has continued to thrive, with an estimated value now at $2.61 trillion.

In 2024, for instance, in nominal terms, real estate services grew by 46.52 percent in the Q3 of 2024, higher by 43.70 percent points than the growth rate reported for the same period in 2023 and lower when compared to the preceding quarter. On a quarter-on-quarter, the sector growth rate was 16.15 percent. It contributed 5.43 percent to real GDP in Q3 of 2024, lower than the 5.58 percent recorded in the corresponding quarter of 2023.

This was why for discerning investors, the real estate presented the most veritable avenue for investment in 2025.  Rapid urbanisation in Lagos, Abuja, and Port Harcourt, coupled with a huge affordable housing demand from Nigeria’s growing population over 220 million; growing popularity of short-let rentals and a shift towards sustainable, solar-powered communities, with investors looking beyond major hubs to emerging corridors like border towns of big cities of Lagos like Akute (Ogun State), Ibadan (Oyo state) for better returns fueled the market.

Besides, diaspora remittances in the sector, amounting to $5.2 billion in Q4 2025- a 10 per cent increase from Q3, stimulated driving investments in a real estate market valued at $2.61 trillion.  With 61.6 per cent demand in Lagos and 46.2 per cent for rentals, these funds were channeled into luxury apartments and commercial spaces.

The sector showed resilience amidst high costs, driven by a huge housing deficit, rapid urbanisation, diaspora investment, and government focus on infrastructure, leading to strong rental demand, rising property values (especially in secondary cities like Ibadan, Epe, Ogun State), and increased acquisition volumes, despite persistent inflation and high borrowing costs. The market saw a mix of boom, driven by demand, new policies and affordability challenges, with investors exploring REITs and smart/sustainable developments

The push for demand for both luxury and affordable housing surged, pushing prices up, particularly in high-growth areas like Ibeju-Lekki.

The year also showcased high cost of construction materials and labour with a base material such as Cement costing up to N10,500 as against the previous year that was as low as between N4,000- N5,000. Cable, wires and iron doubled their previous year prices including plumbing materials.

It was also characterised by strong growth, driven by rapid urbanisation, population boom, and massive housing deficits of about 30 million units, leading to high demand, rising property values, and a thriving rental market, though challenges like high inflation, Naira devaluation, and soaring construction costs persisted, pushing tech adoption.

High inflation and elevated interest rates challenged affordability, yet a mild stabilisation in the forex market eased some construction cost pressures.

With high demand, there was a greater push for innovation in providing affordable housing solutions, a development that brought opportunities for potential for high returns, diaspora investment, infrastructure projects, tech innovation

 But persistent inflation impacting purchasing power, high borrowing costs for buyers and developers and the affordability gap for average Nigerians also had its effect on the sector, notwithstanding that the rental market grew as buying became harder, but long-term prospects remained strong for those who could navigate financing.

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Short-term rentals took a huge leap in the sector this year as a lucrative investment, especially in business/tourism hubs, offering passive income. A major shift towards solar-powered, green estates is occurring, reducing operational costs and enhancing liveability, is also a trend in the sector this year.

Renewed Hope

In the outgoing year, the Renewed Hope Agenda had a mixed impact on real estate, stimulating investment and project groundbreakings while grappling with significant challenges like high inflation, rising construction costs, and an ongoing housing affordability crisis.

The government, through the Ministry of Housing and Urban Development, initiated the construction of over 10,000 housing units across 14 states as part of the Renewed Hope Cities and Estates programme. These projects were designed to offer a range of housing options, from one-bedroom bungalows to duplexes, with completion of early phases- like the 700 units in Ibeju Lekki, Lagos, expected for presidential inauguration.

But despite government efforts, high costs remained a major deterrent for most Nigerians. Inflation-induced pressures, foreign exchange instability and high mortgage interest rates often between 18-30 per cent in the commercial market meant many citizens felt little direct impact from the initiatives.

Undeterred, the government introduced strategies to improve access to homeownership like the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF), which was launched in earlier in the year. This fund aimed to provide mortgages at a more affordable 9.75 per cent interest rate with up to 20-year repayment plans, although initial uptake was slow. Similarly, the Federal Mortgage Bank of Nigeria (FMBN) expanded its rent-to-own and single-digit mortgage loan offerings to make homes more accessible to low- and middle-income earners and members of cooperative societies.

The Renewed Hope Social Housing Programme planned to build 77,400 units in local government areas, offering them at heavily subsidised rates, with some allocated for free to vulnerable populations.

Government’s land regulatory reforms agenda emphasised streamlining land administration to unlock “dead capital” valued at over $150 billion. Initiatives included a National Land Registration and Documentation Programme in collaboration with the World Bank to digitise land registries, improve transparency, and reduce bottlenecks that often hinder investment.

Also, federal government finalized plans to establish six regional manufacturing hubs for building materials across the country. This was intended to reduce dependency on imported materials, cut construction costs, and create thousands of jobs, linking the housing sector to broader industrial goals.

Overall, the Renewed Hope Agenda generated significant activity and laid policy groundwork for long-term transformation, but the real estate market in 2025 was still heavily influenced by persistent macroeconomic challenges, particularly inflation and high costs, which limited the immediate, widespread impact on housing affordability for the average Nigerian.