The decision by the Central Bank of Nigeria to raise interest rates has sparked concerns within the real estate sector, potentially impacting housing affordability and development significantly.
Experts within the built industry have expressed apprehension over the Central Bank of Nigeria’s recent interest rate hike, foreseeing substantial challenges for the real estate market.
 Notable figures such as Toye Eniola from the Association of Housing Corporation of Nigeria and Sola Enitan, CEO of Cromwell Professional Services International Limited, have voiced their worries, predicting a downturn in housing development and affordability.
Toye Eniola, the Executive Secretary of the Association of Housing Corporation of Nigeria, has sounded the alarm regarding the adverse effects of elevated interest rates on loans, stressing that such financial conditions could render housing development projects unviable.
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Similarly, Sola Enitan forecasts that the increased borrowing costs will not only deter potential homebuyers due to higher mortgage rates but also strain existing homeowners, potentially leading to a market correction or stagnation.
Further analysis suggests that the interest rate hike could trigger increased urban-rural migration and a surge in rural land prices as middle and lower-class families seek more affordable living conditions. This shift may also impact agricultural land use, posing additional challenges to food security. The financial strain is expected to extend to banks and financial institutions, with changes in profitability and loan portfolios anticipated as borrowing costs rise.
Femi Oyedele, Managing Director of Fame Oyster & Co. Nigeria, discusses the shift in investment focus due to the interest rate hike, noting that property development will become less attractive to investors.
According to the new governor, Olayemi Cardoso, the Central Bank of Nigeria’s decision aims to curb inflation but carries significant repercussions for the real estate sector, potentially leading to increased costs for building materials and a slowdown in construction activities.
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