The cost of accommodation across major cities in Nigeria has beocome a huge strain on the finances of average Nigerians, who have been bedevilled by the rising cost of goods and services.
According to sources, the cost of accommodation has surged by over 100% in Lagos, Abuja, and Port Harcourt between 2019 and 2022, further fuelling the rising inflation rate in the country.
According to the National Bureau of Statistics (NBS), Nigerians spent a total of N57.1 trillion on household consumption in the first half of the year. This includes spending on food, accommodation, and utilities amongst others, and it represents an increase of 14.4% year-on-year compared to N49.89 billion spent in the corresponding period of 2021.
Increased household spending: Household expenses in H1 2022 accounted for 62.4% of the total national spending for the period, an increase from 61.6% recorded in the previous year.
- The increase in the amount spent by Nigerians on basic amenities was due to the rising cost of goods and services, which has seen the nation’s headline inflation hit a 17-year high of 21.09% in October 2022.
- The cost of accommodation in major cities across the country has recorded significant increases in the past three years, eating into the earnings of average Nigerians, despite a relatively fixed level of income. This has also affected the saving and investing ability of average Nigerians.
- Human basic needs include food, water, shelter, and clothing, all of which have witnessed unprecedented levels of increases in their cost, leaving very little for Nigerians to plan for the future.
Ideally, there is a popular rule of thumb, known as the 30% rule, which says to spend around 30% of your gross earnings on rent. This implies that if an individual earns N100,000 monthly, he/she should not spend beyond N30,000 monthly on house rent.
However, findings show that Nigerians could be spending as much as 40% of their income on house rent, while food expenses still gulp a huge part of their household expenditure.
Dissecting the numbers: The average cost of renting a standard self-contain in the Kubwa area in Abuja is about N500,000 per annum, a staggering 233% increase from an average of N150,000 recorded three years ago. Similarly, a two-bedroom flat currently goes for between N900,000 and N1.5 million annually depending on the nature of the house. It used to be around N600,000.
- Also, a three-bedroom flat, which used to rent for an average of N500,000 for a year, has surged to as high as N3 million, representing a 500% increase in the past three years.
- The cost of apartments is higher in other high-end areas like Gwarinpa, Maitama, Lokogoma etc.
- In the same vein, the cost of a two-bedroom flat in Mainland Lagos has surged to over N1.5 million annual basic rent from an average of N800,000 to N1 million. Also, a mini-flat in the same area goes for an average of N700,000 as opposed to an average of N550,000 recorded three years ago.
- Similarly, in Port Harcourt, Rivers State, the cost of housing has also increased by over 100% in the last three years, a further indication of how accommodation is gulping a huge portion of household earnings.
What agents are saying: In a conversation with Mr Segun Oni, a real estate developer in Lagos State. He said that the increase in house rent is a result of the surge in the cost of building materials after the covid-19 pandemic.
- “It is no surprise that house rent has gone up. The price of cement has almost doubled, cost of sand and granite have also gone up significantly in recent times, coupled with the general increase in prices,” he said.
Also, while speaking to another real estate developer, Mr Jonathan Aniebiet in Port Harcourt, he noted that the surge in the cost of house rent was a result of the general increase in the economy.
According to him, immediately after the covid-19, the price of almost everything spiked, including landed properties, which has also translated to an increase in the cost of accommodation.
- “In expensive areas like GRA, Ada George, and Peter Odili, a room self-contain is rented for an average of N250,000, an increase from around N150,000 before the pandemic. A three-bedroom flat in the same vein rents for an average of N800,000 from an initial rate of N500,000,” he stated.
Mr Thompson Okodua, who is an agent living in Kubwa, Abuja explained that the high cost of accommodation is a result of the increase in the cost of building materials, hence landlords increase their rents to reflect these changes.
He added that many residents now move to the outskirt areas of the city, like Zuba, and Gwagwalada in search of cheaper apartments, even at the risk of spending more on transport to the city.
What Nigerians are doing: Nigerians are currently taking up remote jobs that will afford them to live in cheaper residences, without the hassle of transportation and higher accommodation cost. In a phone conversation with Mr Emmanuel, a house agent in Lagos, he told Nairametrics that most customers now request apartments in areas outside but not too far from the city.
- “People request houses in Sango, Ewekoro, Ajegunle, and Ikorodu areas to avoid the higher cost of houses in major cities in the state,” he said.
While speaking to Mr Tunde Akinyele, a digital marketer, he told Nairametrics that he moved from Ikeja last year to live in Sango, Ogun State due to the high cost of accommodation in most cities in Lagos.
The rising cost of housing coupled with high food prices has eroded the purchasing power of Nigerians, pushing more people below the poverty line. The NBS reported last week that 133 million Nigerians are poor as of 2022, representing 65% of the total population.
Following the increase in accommodation costs, Nigerians who can afford to work remotely are now being creative by living in remote areas at cheaper costs while working in the comfort of their homes. Most young Nigerians now seek remote jobs from foreign companies in a bid to increase their income.
