There are indications that the escalating geopolitical tensions in the Middle East, particularly the growing hostilities involving Israel and Iran, may worsen the housing crisis.
This is going to happen through the ripple effect of the hostilities on the cost of building homes, access to housing finance, and ultimately, the affordability of housing for millions of citizens.
Middle East plays a strategic role in global oil supply, accounting for a significant portion of the world’s crude exports. Any instability in the region — whether through attacks on oil infrastructure or disruptions to key shipping routes such as the Strait of Hormuz — often triggers sharp increases in global oil prices. This development has implications for the housing and construction sector.
“Construction is inherently energy-dependent. The production of cement, steel, glass and aluminium requires substantial energy input, while the transportation of building materials such as sand, granite and reinforcement relies heavily on diesel-powered logistics. As global oil prices rise, the cost of these inputs inevitably increases,” Festus Adebayo, a frontline affordable housing advocate, noted.
In a statement he signed at the weekend, Adebayo noted further that, for developers, this development translates into higher expenses in running construction equipment, transporting materials, and maintaining project timelines.
In most cases, he added, these additional costs are transferred to homebuyers, resulting in an increase in the price of housing units.
Nigeria’s dependence on imported finishing materials further compounds the challenge. Items such as electrical fittings, tiles, sanitary wares, elevators and heating, ventilation and air conditioning (HVAC) systems are often sourced from international markets.
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In periods of global uncertainty, investors tend to move capital toward safer economies, exerting pressure on emerging market currencies such as the Naira.
Currency depreciation increases the cost of imports, including essential building components, thereby inflating the total cost of housing projects. Developers faced with these realities may be forced to scale down construction activities or review property prices upward, placing homeownership further beyond the reach of average Nigerians.
Global crises also fuel inflationary pressures, prompting central banks to increase interest rates as part of broader economic stabilisation measures. While such interventions may be necessary to protect national economies, they often come at a cost to the housing sector.
Higher interest rates raise the cost of borrowing for both developers and prospective homeowners. Construction loans become more expensive, mortgage rates increase, and access to housing finance becomes even more limited — particularly for low- and middle-income earners who already face significant barriers in accessing formal mortgage facilities.
At the governmental level, global instability often necessitates a reallocation of public expenditure towards defence, energy subsidies, food security interventions and other emergency priorities. Housing programmes, especially those designed to support affordable housing delivery, may experience funding cuts or delays.
This could stall ongoing housing initiatives and reduce the number of new units entering the market, thereby intensifying supply shortages in rapidly urbanising cities such as Abuja and Lagos.
As supply tightens and development costs rise, rent levels are likely to increase, further burdening urban residents. The expansion of informal settlements and overcrowded living conditions may become inevitable outcomes if deliberate policy measures are not taken to mitigate these impacts.
