Business

NIOB predicts rise in housing, building materials cost

Inflation

 

A 50kg bag of cement sells for N2, 600 while steel bars sell for N230, 000 per tonne

 

Going by increase in electricity and petroleum prices, the Nigerian Institute of Building (NIOB) is predicting a rise in the cost of building materials and housing units.

 

According to NIOB President, Mr Kunle Awobodu, the implication is that workers, who have been saving money to relocate to their own houses, would still have to tolerate their landlords for a long time to come due to high fuel cost.

 

Besides, he told New Telegraph in Lagos that this would lead to shattered dreams of low cost housing programme of government, arguing that increasing electricity and petroleum costs would further drive up production, distribution and transportation costs.

 

Going down memory lane, the  NIOB boss said that past market survey showed that a 50 kilograms (kg) bag of cement rose from N1,600 to N2,000 and steel reinforcement bars ( locally manufactured TMT) from N135,000 to N140,000 due to hike in fuel prices from N65 to N120 per Litre in 2012.

 

The increase in fuel price from N120 to N145 in 2016, he said resulted in the rise of cement price to N2,300 per 50kg bag and steel bars to N180,000 per tonne. Just before this current upward review of fuel price to about N151.56, Awobodu stated that a 50kg bag of cement sold for N2,600 while steel bars was N230,000 per tonne.

 

“Sadly, these two prominent building materials are being manufactured locally, thereby questioning the rationale behind backward integration and local content policies,” he said.

 

From the NIOB archive, Awobodu noted that hikes in fuel prices always led to price increases in building materials. “Hence, it does not require a Nostradamus to predict inflation in the prices of building materials with the latest increase in fuel price,” he said.

 

To this end, the NIOB president is canvassing the reversing of electricity and fuel price increase, saying only this would do the critical masses and Nigeria’s economy and, especially the construction industry good.

 

“It is our considered view that reversing the recent increases will do the critical masses and Nigeria’s economy and, especially the construction industry good,” he said.

 

Awobodu said the disposable incomes and purchasing power of Nigerians have further reduced due to increase in fuel pump price, pointing out that without appreciable construction activities, employment challenges would remain hydra headed. He is of the opinion that increased construction activities would benefit both the government and the citizens.

 

“The Federal Government through its agencies might have adduced reasons for these increases such as appropriate pricing based on market forces, the NIOB finds it necessary to explain the unintended effects of such increases on the construction industry that produces our housing and other infrastructure stock,” Awobodu said.

 

He argued that the construction industry engaged a lot of actors, including professionals, artisans, and business organisations such as contractors, materials manufacturers, equipment manufacturers or leasing organisations, adding that many of these organisations were small medium enterprises that remained the engine room of growth in national economies.

 

According to him, the use of the construction industry to grow national economies cannot be overemphasised. As a present, he stated that a cursory survey of some building materials manufacturers has revealed that many were closing shops on account of cost of production combined with the harrowing effect of the COVID-19.

 

Increasing energy costs, he said would further asphyxiate the few building material manufacturing companies still surviving. The implication of this scenario on improving nation’s housing stock, he said was better imagined.

 

“The government or any other stakeholder may stimulate a scenario for the production of some inputs such as doors for large number of housing projects. A shocker may be exposed: the capacity to even meet those elementary needs would be seen to remain low,” he said.

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