A Look Into Nigeria’s Rising Real Estate Costs Amid A Declining Inflation Rate | Gidi

Inflation is not an abstract index; it is the silent tax that devalues effort. Technically, it is a sustained increase in the general price level, accompanied by a corresponding decline in the purchasing power of money. Practically, it means ₦1,000 buys less each month.

Low, stable inflation can lubricate commerce by encouraging spending and investment. High, volatile inflation erodes household incomes and savings, distorts business planning, and undermines social stability. Nigeria has lived with that corrosion for long; rising prices have deepened poverty and forced firms to cut costs, delay expansion, or exit altogether.

By late 2022, headline inflation climbed to a two-decade high. In 2023, necessary but painful corrections, namely, the removal of fuel subsidies and FX liberalization, triggered sharp pass-through effects in transport, energy, and food. The naira repricing and higher pump prices pushed inflation toward levels unseen since the mid-1990s. Those shocks exposed how vulnerable a consumption-heavy, import-dependent economy is to policy resets and external pressures.

Why is Nigeria’s inflation so persistent?

First, money and deficits: periods of fiscal slippage financed by central bank support have expanded liquidity faster than output.

Second, currency depreciation raises the local cost of imported fuel, inputs, and capital goods, transmitting “imported inflation” into every value chain.

Third, energy and logistics: expensive petrol, diesel, and unreliable power increase operating costs that A Look into Nigeria’s Rising Real Estate Costs amid a Declining Inflation Rate A Look into Nigeria’s Rising Real Estate Costs amid a Declining Inflation Rate Producers Must Pass Through.

Fourth, food supply: insecurity, weather shocks, weak storage, and poor rural roads keep food inflation elevated.

Finally, structural rigidities, slow ports, weak rail, and bottlenecked approvals embed high costs into everyday transactions.
Social and governance factors compound economics. Policy inconsistency breeds uncertainty; corruption diverts scarce public resources from productivity-enhancing uses and sustains parallel markets. In such an environment, textbook remedies deliver limited results if the structural hindrances remain.

The past 18 months, however, have brought early relief. After nineteen consecutive monthly increases, inflation recorded a modest dip by mid-2024. A CPI rebasing in early 2024 improved measurement, and genuine disinflation followed as base effects, tighter monetary conditions, calmer FX, and easing global cost pressures took hold.

Through 2025, the headline inflation trended down into the low 20s. Disinflation is not deflation; prices are still rising, only more slowly, but the direction is better. Food remains expensive and core pressures linger, so discipline is still required to sustain the glide path.

If inflation is easing, why do real estate prices not follow? In Lagos, the country’s deepest real estate capital, both sale prices and rents rose decisively in 2024 and remained elevated into 2025. The explanation sits at the intersection of business practicality and economics.

From a business lens, the inflation rate does not unwind the cost resets of 2023–24. Developers are still procuring at a higher plateau: cement, steel, finishes, diesel, and logistics have all ratcheted up; specialized imports reprice with FX; site power remains costly; and contractors demand inflation clauses to survive. Project budgets doubled in some cases.

Frequent policy formulation keeps construction finance expensive, equity requires fatter cushions, and delays carry real-time-value costs. Even with a cooler CPI print, the feasibility math compels higher list prices and rents to clear hurdles and protect thin margins.

From an economist’s lens, housing is governed by a slow, supply-constrained cycle. Nigeria’s housing deficit is large; urbanization is relentless; Lagos absorbs new households monthly. Mortgage penetration remains shallow and expensive, so many households rent or self-build incrementally.

On the supply side, land assembly is slow, titling is uncertain, approvals are sequential, and infrastructure is often privately provided at the estate level. Supply is inelastic in the short run, especially when the cost of capital is high. The result: strong, sticky demand meets constrained, costly supply. Prices resist downward adjustment even as headline inflation cools.

Social dynamics amplify the pattern. In uncertain macro periods, property becomes a hedge against naira risk; savings, remittances, and sometimes opaque flows chase hard assets less sensitive to monthly CPI prints. That investor bid props up valuations and tightens rental markets. Cultural preferences for land as the ultimate store of value reinforce the channeling of capital into property rather than productive enterprise, widening the affordability gap for the middle of the market.

What should be done? Three priorities can realign the sector with the improving macro.

First, reduce the cost of building. Digitize approvals with service-level agreements; expand serviced land banks and trunk infrastructure to compress developer capex; adopt transparent, time-bound titling. Coordinated bulk procurement for social and affordable housing can smooth input price spikes across cycles. Second, fix housing finance.

Deepen mortgage liquidity, strengthen a secondary market to term out originations at lower coupons, and introduce blended-rate, first-time-buyer products. As inflation trends down, a credible macro anchored by fiscal discipline should allow policy rates and, therefore, mortgages to migrate lower.

Third, keep the macro credible. Sustained disinflation requires consistent FX management, tighter fiscal operations, and clear communication. Policy stability is the cheapest subsidy; it reduces risk premia embedded in every developer’s model.

Lagos should be the proving ground. If we can move a compliant project from concept to site within 90 days, deliver serviced corridors ahead of private builds, and cut the cost of money through better credit architecture, we will shave months and percentage points off delivered prices. Complement that with targeted social protection, so reform pain is bearable, and with enforcement against illicit property flows that distort pricing and crowd out genuine end-users.

Nigeria’s inflation is finally bending in the right direction. Real estate will not mirror that path automatically. Costs were reset upward; friction remains; expectations are sticky.

The task now is execution: lower the embedded costs of land, power, logistics, and finance; lengthen and cheapen mortgage tenors; and keep macro signals steady. Do this with discipline, and the housing market will begin to obey the broader economic story the data now suggests, one of gradual stabilization, restored confidence, and affordability rebuilt over time.

 

Author: Ayorinde Ejioye
COO, Co-Founder, Gidi Real Estate Investment Limited.
MNIS, MNIE, FIMC, CMC