About 70 per cent of Nigerians remain excluded from mortgage financing,
leaving the country’s real estate market heavily dependent on cash transactions
and limiting home ownership for the salaried middle class, according to a new
market report by investment firm Panterra.
In a note on Nigeria’s Real Estate Market: H1 2026, prepared by the firm’s
Chief Investments Officer, Ayo Ibaru, it said despite the Central Bank of
Nigeria’s reduction of its benchmark interest rate to 27 per cent in late 2025,
commercial mortgage rates remain between 25 and 30 per cent, making housing
finance unaffordable for most Nigerians.
According to the report, the prevailing interest rate environment means that
conventional mortgage financing for properties valued at about N450 million
would require household incomes running into hundreds of millions of naira
annually, effectively shutting out the country’s salaried workforce.
“As a result, cash buyers, business owners and Diaspora investors continue to
dominate the housing market, while mortgage financing remains inaccessible to
approximately 70 per cent of Nigerians,” the report stated.
Panterra noted that Nigeria’s property market remains largely cash-driven, with
limited access to long-term housing finance creating a structural gap that
continues to constrain home ownership and residential development.
The report identified the middle-income segment as the biggest casualty of the
mortgage financing gap, arguing that innovative financing models, including
building materials financing schemes, could help bridge the affordability
challenge by bypassing conventional mortgage requirements.
Beyond financing, the report highlighted rising construction costs as another
major obstacle confronting developers.
It said inflationary pressures have pushed the cost of building materials
significantly higher, citing cement prices that climbed from between N8,500
and N10,000 per 50kg bag in 2025 to as much as N13,000 in 2026.
It warned that sustained increases in material prices, foreign exchange volatility,
import dependence for finishing materials and high logistics costs are forcing
many developers to delay projects, scale back construction plans or abandon
developments altogether.
The report also cautioned that escalating costs are encouraging some developers
to compromise on construction quality by using substandard materials,
potentially increasing the risk of structural failures.
“The quality of construction is being eroded due to cost pressure. Industry
leaders caution that when costs exceed manageable levels, certain developers
may resort to substandard materials in order to reduce expenses, thereby
jeopardizing the quality and safety of the building. Structures can be directly
weakened, and structural failure may result from a reduction in the engineer-
specified cement ratio,” the report said.
Despite these challenges, Panterra projected that infrastructure development
would remain the biggest driver of property values in Nigeria.
It noted that homes located within five kilometers of major highway projects
currently command price premiums of between 25 and 40 per cent, while
properties close to new rail stations enjoy premiums ranging from 15 to 30 per
cent.