Nigeria’s Urban Housing Market Faces Intensifying Affordability Pressures Despite Signs of Resilience in 2025

Nigeria’s housing market in 2025 remained under sustained pressure as inflation, elevated construction costs, and regulatory constraints deepened the country’s affordability crisis, even as targeted reforms and investor activity continued to support market resilience.

Urban Households Face Mounting Affordability Constraints

The housing sector experienced one of its most challenging years in recent history as persistent inflation, high material costs, and currency volatility kept home prices, construction inputs, and rental rates on an upward trajectory. According to national inflation data, the inflation rate slowed to 16.05% in October 2025, its lowest level since 2022. However, the moderation did not ease pressure on housing markets in Lagos, Abuja, Port Harcourt, Enugu, and other fast-growing urban centres.

Rapid urbanisation and population expansion intensified demand for both rental and owner-occupied housing. With median monthly incomes sitting below ₦70,000, most households found homeownership increasingly unattainable. In several metropolitan markets, two-bedroom apartments now demand up to ₦2.5 million in yearly rent, pushing many first-time buyers into the rental segment.

Construction Costs and FX Pressures Limit New Supply

Rising input prices remained a critical factor constraining housing supply. Sector investigations show that Nigeria relies on imported building materials for as much as 80 per cent of its supply needs (excluding cement). The naira’s volatility earlier in the year significantly inflated the cost of cement, steel, roofing products and tiles, escalating overall construction budgets.

Industry analysts attributed the price volatility to “cost-push inflation”, where exchange-rate movements directly influence production and import costs. For developers, this translated into unpredictable project budgets, delayed completion timelines, and reduced appetite for new developments.

Additionally, lengthy approval procedures, multiple levies, and inconsistent enforcement of planning regulations increased transaction costs. Several states carried out extensive demolitions of non-compliant structures, resulting in financial losses and reduced investor confidence, especially among small and mid-scale developers.

Sector Performance and Macroeconomic Signals

Despite structural challenges, real estate maintained its relevance within Nigeria’s broader economic landscape. As of 2024, the sector contributed 5.45% to national GDP, with a valuation of ₦41.3 trillion, according to the National Bureau of Statistics (NBS). The construction sector also posted moderate growth, expanding by 5.57% in Q3 2025.

Macroeconomic indicators offered mixed signals. The national economy recorded 3.98% growth in Q3 2025, buoyed largely by the agriculture and ICT sectors. The naira experienced relative stability for four months, closing at ₦1,422/$1 by October 2025. Foreign reserves rose to $42.1 billion, the highest since 2019, a development experts believe could ease import-driven pressures on construction supply chains going into 2026.

Government Interventions Struggle Against Market Realities

The Federal Government’s ongoing housing programmes faced constraints due to limited budgetary allocation and high unit delivery costs. Participation in the Renewed Hope Housing Programme remained modest, particularly among low-income earners who struggled with equity contributions and overall affordability thresholds.

To ease access to long-term financing, the Ministry of Finance Incorporated (MOFI) launched the Real Estate Investment Fund (MREIF) in 2025, offering mortgages at 9.75% interest with repayment terms of up to 20 years. Nigerians at home and in the diaspora may access up to ₦100 million with a minimum 10% equity contribution. Although the scheme marks progress in mortgage sector reform, uptake remains below expectations due to high inflation and limited consumer purchasing power.

Stakeholders Call for Structural Reforms

Industry leaders described 2025 as a year defined by resilience amid severe macroeconomic constraints. They highlighted the need for improved policy implementation, standardised building regulations, mortgage market reform, and greater reliance on locally manufactured materials.

Experts from the Nigerian Institution of Estate Surveyors and Valuers (NIESV) emphasised the need to address cost-push inflation and stabilise the FX market to make construction and mortgage financing predictable. Others called for wider adoption of the National Building Code and improved coordination among professional bodies to prevent costly regulatory oversights.

The Nigerian Society of Engineers and the Nigerian Institute of Town Planners (NITP) underscored the consequences of bypassing professional oversight, noting that multiple demolitions in 2025 stemmed from avoidable violations of planning regulations. They stressed that professional planning remains central to ensuring sustainable urban development and reducing economic waste.

Market Outlook: Gradual Recovery Possible but Risks Persist

Analysts expect market conditions to improve modestly in 2026 if inflation continues to ease and foreign exchange stability is sustained. Sub-segments such as office space and retail real estate are projected to enter a recovery cycle following years of subdued activity.

However, long-term improvement remains tied to Nigeria’s ability to expand affordable housing supply, strengthen mortgage access, deepen public-private partnerships, and promote local manufacturing of building inputs. Without structural reforms, the affordability crisis may intensify, further widening the housing deficit and entrenching rental-driven market dynamics.

Conclusion

Nigeria’s 2025 housing market captured the duality of resilience and vulnerability. While investors continued to show interest and government programmes attempted to address systemic gaps, high costs, regulatory inefficiencies, and macroeconomic instability kept housing affordability out of reach for millions. The path to recovery hinges on coordinated reforms that expand supply, improve planning compliance, strengthen financing, and reduce reliance on imports a priority that stakeholders agree must define the agenda for 2026 and beyond.