As property developers grapple with the effects of inflation, they find themselves locked in a fierce struggle against the soari...
As property developers grapple with the effects of inflation, they find themselves locked in a fierce struggle against the soaring cost of building material which have surged by 700 per cent over the past five years, JOSEPHINE OGUNDEJI writes
In recent years, developers have found themselves in a fierce battle against inflation as the prices of building materials have skyrocketed by 700 per cent over five years.
The sharp rise in material expenses has also caused widespread disruption in the construction industry, posing significant challenges for both large-scale developers and homeowners.
This surge, Sunday PUNCH learnt, can be attributed to a combination of factors, including disruptions in the supply chain, increased demand, escalating labour costs, and wholesalers raising prices compared to ex-factory rates.
Consequently, projects that were once financially viable now grapple with considerable budget constraints, prompting developers to seek alternative strategies to mitigate the impact of inflation.
As a result of this inflationary pressure, there has been a slowdown in construction activity as developers struggle with the financial implications of soaring material costs. Many projects have been delayed or put on hold indefinitely as developers reassess their budgets and financing options in light of the unprecedented circumstances.
The affordability of housing, already a pressing issue in many regions, has been further exacerbated by the rising costs of construction materials, making it increasingly challenging for individuals and families to access adequate housing options.
To ascertain the cumulative surge of 700 per cent across three key building materials which engineers confirm are granite, iron rods, and cement over five years, Sunday PUNCH analysed the percentage increase for each material separately.
The price of granite rose remarkably from N2,700 to N11,000 per tonne, marking a 307 per cent increase.
Iron rods, ranging from 10mm to 16mm and averaging at N180,000 per ton in 2019, have skyrocketed to N1,450,000 per tonne, indicating a 706 per cent increase.
Cement prices surged from N2,400 to N13,000 per bag over the same period, representing a 442 per cent increase.
In 2019, the total sales price for the products was N185,100. In 2024, the total sales price was N1,474,000. The total increase in sales price over the five years was about N1,288,900.
To find the average increase over the five years as a percentage, the total increase (1,288,900) was divided by the total sales price in 2019 (185,100) and then multiplied by 100. This gives an average increase of approximately 696.29 per cent for the combined sales prices of the products from 2019 to 2024.
The cumulative average increase for all three products from 2019 to 2024 is approximately 696.29 per cent, which can be rounded to 700 per cent. This means that over the five years, the total price of the three products combined increased by about 700 per cent compared to the sales in 2019.
In simpler terms, the price nearly multiplied by eightfold from their initial level in 2019 to their level in 2024.
This significant increase reflects substantial growth and success in the sales of the products over the specified timeframe.
A retailer, Olaniyan Bashiru-Kola, while lamenting the situation, told our correspondent that the continuous price increase jolted him.
Bashiru-Kola appealed to the government to cushion the effect of the inflation as retailers were already bearing the brunt.
“Just February 21, I purchased iron rods (12mm per tonne) in the morning when I wanted to book again by evening, the wholesalers said they were no longer selling, hence I bought it the next morning for N1,450,000.
Most of us retailers are borrowing money to eat, we know once God brings a purchaser our way, we will reimburse those we owe. I wish I could see and talk to the government myself, let them help us reduce this increase in iron rods to N300,000 at most; this would encourage customers.
Presently, my customers are reaching out mainly to inquire about pricing rather than making immediate purchases. They’re also in a state of anticipation, waiting for materials to decrease in cost before proceeding with their building projects,” he told Sunday PUNCH.
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