To say that real estate in Nigeria is experiencing a bubble is no longer news. What is news instead is that the crash of that bubble is quite imminent.
Economic analysts are of the view that a 100 percent increase in construction costs over the last 24 months, and a 200 percent rent increase, especially at city centres, are just unsustainable.
The analysts also see a market correction on the way as demand and price disequilibrium persist.
Bismarck Rewane, CEO, Financial Derivatives Company (FDC), explained recently that the market correction looms for obvious reasons, one of which is oversupply of properties from overbuilding in Nigeria’s big cities, particularly Lagos, Abuja and Port Harcourt.
Rewane, who spoke at the Financial Derivatives Company and Lagos Business School (LBS) Breakfast Session in August 2026, listed other reasons for the market correction, including a shift to the right in the supply curve due to excess inventory.
‘Rents have kept rising, cutting affordability; the market is experiencing rising delinquency and mortgage defaults, and property prices fall sharply, triggering a crash,’ he noted.
The rental situation in the country is dire. At the moment, the rent-to-income ratio is about 70 percent, more than double the United Nations 30 percent benchmark.
Some reports indicate that the increases have been significant in certain areas. For example, in Lagos, rents have surged by up to 200 percent over the past two years, with two-bedroom apartments averaging N2.5 million annually.
This surge has made homeownership increasingly unattainable for many Nigerians, leading to a shift in demand towards rental housing. The rental market is currently facing one of its toughest periods in recent history.
The N2.5 million annual rent for a two-bedroom apartment represents a sharp rise compared to what was obtainable a few years ago, and highlights the deepening affordability crisis confronting millions of Nigerians.
Building and construction materials costs have risen to unimaginable levels, increasingly making homeownership dreams a pipe-smoke for many home-seeking Nigerians.
The cost of building a modest residential house has risen to a point where it now requires almost double the financial commitment that it did a few years ago. Contractors are revising estimates almost monthly, developers are postponing projects, and prospective homeowners are watching their savings lose value in the face of relentless inflation.
The increase in materials costs is most pronounced in cement, which, contrary to manufacturers’ claims of local supply sufficiency, has seen prices rise from N7,500 in the last quarter of 2024 and N9,000 in the third quarter of 2025 to between N12,000 and N15,000 presently. Blocks rose from N600 to N1100; 30T of sand moved from N165,000 toN250,000; 30T of granite rose from N530,000 to N780,000, while rebars (iron) moved from N850,000 to N1,150,000 per tonne.
As a result of these price increases, Dimeji Aluko, an estate surveyor and valuer, notes that the construction industry, once regarded as one of the country’s major drivers of employment and economic activity, now finds itself navigating one of its most difficult periods in recent history.
‘Behind the soaring prices of cement, reinforcement bars, roofing sheets, electrical fittings, plumbing materials, aluminium products, tiles, paints, doors, windows, and finishing components lies a complex combination of macroeconomic challenges that continue to reshape the real estate sector,’ Aluko stated.
He also sees a possible crash of the market bubble, explaining that persistent cost escalation makes financial planning increasingly difficult. ‘Projects originally expected to generate acceptable returns suddenly become financially unviable. Developers either postpone construction, reduce project scope, seek additional financing, or pass increased costs to buyers through higher selling prices,’ he noted.