1.0 Introduction
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1.1 Background of Study
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The construction industry plays a vital role in the socio-economic development of any nation. It is a significant driver of growth, providing infrastructure, employment, and housing for the population. However, the sector’s performance is heavily influenced by the cost and availability of building materials. In recent years, Nigeria has witnessed a continuous and alarming increase in the cost of building materials, which has had adverse effects on property development across the country. According to Adebayo and Adebiyi (2021), the cost of essential construction materials such as cement, iron rods, tiles, and roofing sheets has surged beyond the affordability of many developers and individuals. The authors reported that between 2020 and 2022, the cost of cement alone increased by more than 40%, largely due to inflation, importation challenges, and currency devaluation (Adebayo and Adebiyi, 2021).
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Ezeokoli et al. (2019) asserted that the volatility in building material prices is one of the greatest challenges confronting the real estate and construction industries in Nigeria. They noted that the unpredictability of these costs has made it difficult for developers to plan and execute long-term projects, thus undermining the viability of property investments. Moreover, the high cost has contributed significantly to the country's housing deficit, which is estimated to be over 17 million units (Ezeokoli et al., 2019).
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Oladapo (2006) stated that factors such as poor infrastructure, high transportation costs, dependency on imported materials, and lack of regulatory controls have all contributed to the persistent rise in building material prices. Similarly, Okoye and Ofori (2020) affirmed that the continuous rise in the cost of construction inputs has led to a situation where many potential homeowners and developers are either priced out of the market or forced to settle for substandard alternatives (Okoye and Ofori, 2020). The cost of building materials plays a significant role in determining the pace, scope, and quality of property development in any economy. Building materials refer to the physical items used in the construction of buildings and infrastructure, including cement, steel, bricks, timber, glass, and roofing sheets, among others (Oladapo, 2006).
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In recent years, Nigeria has experienced a significant increase in the prices of building materials, a trend that has raised concern among stakeholders in the construction and real estate sectors. According to Adebayo and Adebiyi (2021), the price of cement alone in Nigeria rose by over 40% between 2020 and 2022, largely due to foreign exchange instability, rising energy costs, and supply challenges. These fluctuations have made it increasingly difficult for developers to plan and execute projects within budget, especially in urban centers where demand for housing continues to outstrip supply (Adebayo and Adebiyi, 2021). The rising cost of building materials has a cascading effect on property development. It affects not only the cost of housing but also the availability and affordability of homes, particularly for low- and middle-income earners (Ezeokoli et al., 2019). Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the effects of rising cost of building material on property development.
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1.2 Statement of Problems
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Investigation revealed that a significant number of construction projects in Nigeria have been delayed or abandoned because of budget shortfalls directly linked to material price hikes (Adebayo and Adebiyi (2021). Ezeokoli et al. (2019) asserted that the erratic prices of materials are creating uncertainty within the real estate sector, reducing investor confidence and limiting expansion of the housing market.
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Furthermore, some developers are now forced to use substandard or alternative materials to manage expenses, which is increasing the risk of structural failures and compromising safety (Okoye and Ofori, 2020). Additionally, Oladapo (2006) affirmed that contractors are beginning to avoid long-term fixed-price contracts due to fear of unexpected cost escalation, thereby making construction agreements more unstable and difficult to enforce (Oladapo, 2006). It is against this backdrop that this study seeks to examine the effects of the rising cost of building materials on property development.
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1.3 Purpose of the Study
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The purpose of this study is to examine how the rising cost of building materials is affecting the progress, affordability, and sustainability of property development in Nigeria. It aims to understand the causes of material price escalation, its impact on construction activities, and to suggest practical solutions to improve housing delivery in the face of rising costs.
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1.4 Aim and Objectives of Study
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The aim of the study is to assess the effects of the rising cost of building materials on property development in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
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\r\n- To examine the impact of rising material costs on the quality, cost, and delivery of property development.
\r\n- To assess the coping strategies adopted by developers in managing rising construction costs.
\r\n- To evaluate how the cost of materials affects housing affordability for different income groups.
\r\n- To identify the major factors responsible for the rising cost of building materials in Nigeria.
\r\n- To propose recommendations for policy intervention and sustainable material cost control.
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1.5 Research Questions
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The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
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\r\n- What are the major factors responsible for the rising cost of building materials in Nigeria?
\r\n- How does the increase in material cost affect the quality, cost, and timely delivery of property development?
\r\n- In what ways does the rising cost of building materials affect housing affordability for low- and middle-income earners?
\r\n- What coping strategies are property developers adopting in response to rising material costs?
\r\n- What policy recommendations can be made to manage the effects of material cost escalation on property development?
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1.6 Research Hypothesis
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In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
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Hypothesis One
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\r\n- H0: The rising cost of building materials has no significant effect on property development in Nigeria.
\r\n- H1: The rising cost of building materials has significant effect on property development in Nigeria.
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Hypothesis Two
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\r\n- H0: Property developers are not significantly influenced by the cost of materials in their decision-making and construction strategies.
\r\n- H1: Property developers are significantly influenced by the cost of materials in their decision-making and construction strategies.
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1.7 Significance of Study
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The outcome of this research will guide policymakers in formulating responsive strategies to regulate prices, support local production of building materials, and enhance supply chain efficiency within the construction industry. For prospective homeowners and the general public, the study will raise awareness of the economic implications and advocate for inclusive housing policies.
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Furthermore, the study will serve as a reference point for researchers and scholars interested in construction economics and real estate development. It will add to existing literature by providing updated data and analysis on the impact of material cost inflation in the Nigerian context.
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Lastly, this study will support efforts to create a more resilient, affordable, and sustainable property development environment in Nigeria.
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1.8 Scope of Study
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The scope of this research is focused on the effects of rising cost of building material on property development. The study will be carried out in Lagos State, targeting selected property development companies such as UPDC Plc, Lekki Gardens, and Urban Shelter Limited. It will cover their construction practices, procurement trends, and cost management strategies.
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1.9 Limitations of the study
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During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
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\r\n- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
\r\n- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
\r\n- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
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1.10 Definition of Terms
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Building Materials:
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These are the physical items used in construction such as cement, sand, iron rods, tiles, and roofing sheets. According to Oladapo (2006), they form the basic inputs in property development and directly influence project cost and quality.
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Property Development:
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This refers to the process of planning, financing, constructing, and delivering residential, commercial, or industrial buildings. Ezeokoli et al. (2019) defined it as the transformation of land into usable real estate assets.
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Cost Inflation:
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This is the general increase in the prices of goods and services over time. in the construction context, Adebayo and Adebiyi (2021) stated that it relates to the rise in the cost of construction materials and labor.
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Affordability:
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This refers to the capacity of individuals or groups to purchase housing within their income range. Ihuoma and Onwusonye (2022) emphasized that affordability is increasingly compromised when material costs rise without corresponding income growth.
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Real Estate Market:
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This is the sector involving the buying, selling, and leasing of properties. According to Okoye and Ofori (2020), this market is highly sensitive to economic variables such as inflation and material cost changes.
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