CBN’s recent MPR benchmark raise from 11.5% to 13% will likely spike the cost of bank borrowing at around 30% APR.
Following the CBN’s recent Monetary Policy Rate (MPR) benchmark raise from 11.5% to 13%, the cost of bank borrowing from commercial banks is now projected at around 30% APR. The unaffordability nature of Nigeria’s housing market remains a matter for consideration. While the government has struggled to bridge the nation’s housing deficit, real estate developers grapple with meeting project timelines and completions. As proper estimating becomes more critical, the building industry continues to battle the rising cost of construction materials, including supply constraints. This begs the question of what’s in it for the housing market. The impact of fast urbanisation, growing younger demography, and increasing infrastructure provision has continued to pressure property values, even in tier-2 cities like Abeokuta, Benin, and Asaba.
With Inflation rates rising by over 60% points from pre-pandemic levels, the growing level of economic uncertainty may pose a steep barrier to further discourage developers and investors from accessing bank loans for housing provisions. This may negatively impact future stock and housing quality as developers leverage other funding options like partnerships and off-plan sales to boost delivery.