Ripple effects from the Central Bank of Nigeria’s increase of the Monetary Policy Rate (MPR) is expected to affect cost of living, which will impact on property prices and home financing.
The apex bank recently raised the benchmark interest rate by 150 basis points from 11.5 per cent to 13 per cent. MPR is the rate at which the bank lends to commercial banks and often determines cost of funds in the economy.
Sequel to the development, housing experts have expressed worries on the implication. They noted it would increase operating costs, prices of housing and limit profit maximisation for non-creative operators in the industry.
The real estate sector has been battling high inflation, which affect prices of building materials, making housing unaffordable. Nigeria’s official inflation climbed to 16.82 per cent in April (7.82 per cent) above the CBN’s target ceiling of nine per cent.
According to experts, the housing delivery challenges are rooted in three major factors namely, lack of finance, escalating cost of building materials and infrastructural development cost. These problems hamper efforts of private developers and housing agencies to build affordable housing and reduce contribution of the real estate sector to the nation’s Gross Domestic Product (GDP).
