Nigeria’s Rental Burden Rises As Costs Jump 200% In 2 Years

Nigeria’s housing crisis is deepening as rental costs have surged by as much as 200 per cent over the past two years, placing unprecedented financial pressure on households and reshaping the country’s urban living patterns.

A new report by Fortren & Company shows that Nigeria, led by Lagos, has emerged as one of Africa’s most expensive rental markets, driven largely by rising construction costs and macroeconomic headwinds that continue to erode housing affordability.

The report indicates that soaring building material prices, coupled with inflation, currency depreciation, and high borrowing rates, have significantly increased the cost of property development, making homeownership increasingly unattainable for many Nigerians.

As a result, demand has shifted sharply toward rental housing, intensifying competition and pushing rents higher.

Data obtained by LEADERSHIP reveals that Lagos ranks fourth among African cities with the highest rents for two-bedroom apartments, behind Abidjan, Cape Town, and Accra.

According to the report, titled “Average Rent of 2-bedroom Apartments Across Africa’s Most Important Cities,” the average annual rent for a luxury two-bedroom apartment in prime Lagos locations such as Ikoyi, Banana Island, and Victoria Island is estimated at $19,379 (about N26.8 million).

While this remains below Abidjan’s $41,671, Cape Town’s $27,813, and Accra’s $26,299, analysts say it still represents a steep and unsustainable burden for residents in a country where incomes have not kept pace with rising costs.

Principal Partner at Ubosi Eleh + Co, Chudi Ubosi, said rental prices have risen dramatically, increasing by 50-200 per cent over the past 24 months.

He noted that the income-to-rent ratio has now climbed to approximately 70 per cent, far exceeding the United Nations’ recommended benchmark of 30 per cent, underscoring the severity of Nigeria’s housing affordability crisis.

The sharp rise in rents is forcing many households to devote a larger share of their income to accommodation, leaving less for other essential needs and worsening overall living conditions.

Analysts warn that the trend is also driving a gradual urban shift, as residents are increasingly priced out of city centres and relocating to more affordable areas on the outskirts.

In these areas, annual rents for two-bedroom apartments now range between N1.5 million and N2.5 million, offering some relief but often at the cost of longer commute times and reduced access to infrastructure.

With construction costs still on the rise and limited access to affordable housing finance, experts caution that Nigeria’s rental burden may continue to climb unless targeted policy interventions are introduced to stabilise the housing market and expand supply.

Despite the challenges, the situation presents opportunities for investors, particularly in the build-to-let segment focused on smaller housing units. With home ownership increasingly out of reach, rental demand is expected to remain strong in the near term.

The report attributes high rental costs in Lagos to limited land supply in prime locations, rising construction expenses, speculative investment practices, and the impact of currency devaluation.

It also highlights the prevalence of dollar-denominated rents in high-end areas, further narrowing accessibility and sustaining elevated pricing.

Research director at Fortren & Company, Martin Uche explained that luxury developments in areas such as Ikoyi’s Bourdillon, Alexandra, and Gerrard corridors command rents as high as $130,000 annually, reflecting the premium nature of such properties.

Beyond Nigeria, similar trends are evident across major African cities. In Cape Town, rents have risen by 68.5 per cent since 2014 due to an influx of migrants and a shift toward short-term rentals.

Accra’s high rental costs are linked to strong demand from multinational firms, diplomatic missions, and expatriates competing for limited high-end housing.

The report also points to structural issues within Africa’s rental system, noting that advance rent payments, often spanning one to two years, remain common in countries like Nigeria, Ghana, Sierra Leone, and Cameroon.

This practice, driven by limited access to credit data and low-trust market conditions, places additional financial strain on tenants.

As construction costs continue to climb, stakeholders warn that without targeted policy interventions and increased housing supply, Nigeria’s housing crisis may deepen further, leaving more citizens priced out of both ownership and affordable rental options.