Authored by the expert who managed and guided the team behind the Nigeria Property Pack
Everything you need to know before buying real estate is included in our Nigeria Property Pack
Nigeria's housing deficit continues to drive property prices upward across major cities as supply fails to meet growing demand.
With approximately 28 million housing units needed nationwide and only 100,000-200,000 new homes built annually, the gap between supply and demand creates persistent upward pressure on both purchase and rental prices. Lagos alone requires 2 million additional housing units, while cities like Abuja, Port Harcourt, and Kano face similar shortfalls relative to their expanding populations.
If you want to go deeper, you can check our pack of documents related to the real estate market in Nigeria, based on reliable facts and data, not opinions or rumors.
Nigeria's housing deficit of approximately 28 million units significantly outpaces new construction, with only 100,000-200,000 homes built annually against 3.7 million new households formed each year.
This supply-demand imbalance drives consistent property price increases, particularly in Lagos, Abuja, and Port Harcourt, where middle-income households spend 40-60% of income on housing.
| Housing Metric | Current Status | Impact on Prices |
|---|---|---|
| Annual Housing Deficit | 28 million units nationwide | Drives 8-15% annual price increases |
| New Construction Rate | 100,000-200,000 units/year | Supply shortage pushes prices up |
| Household Formation | 3.7 million new households/year | Demand exceeds supply 18:1 |
| Population Growth | 2.6% annually | Sustained upward price pressure |
| Lagos Housing Deficit | 2 million units needed | Premium pricing in major cities |
| Income Spent on Housing | 40-60% for middle-income | Affordability crisis emerging |
| Vacancy Rate | 5-8% in major cities | Low vacancy maintains high prices |
How many new homes are actually being built each year compared to household formation?
Nigeria builds approximately 100,000 to 200,000 new housing units annually, while forming 3.7 million new households each year.
This creates a massive supply-demand gap where new construction meets only 3-5% of annual housing demand. Lagos State contributes roughly 40,000-50,000 new units annually, while Abuja adds about 15,000-20,000 units.
The construction rate has remained relatively stagnant over the past five years despite population growth. Private developers focus primarily on high-end properties in Victoria Island, Ikoyi, and Abuja's Central Business District, leaving middle and low-income segments underserved.
Government housing programs like the National Housing Programme aim to deliver 300,000 units annually by 2030, but current implementation falls far short of these targets. State governments in Rivers, Kano, and Ogun have initiated housing projects, but combined output remains below 50,000 units yearly.
This supply shortage directly drives property price increases across all Nigerian cities.
What is the current size of Nigeria's housing deficit?
Nigeria faces a housing deficit of approximately 28 million units as of September 2025.
Lagos alone requires 2 million additional housing units to meet current demand, while Abuja needs 800,000 units. Port Harcourt, Kano, and Ibadan each face deficits ranging from 300,000 to 500,000 units.
The Federal Mortgage Bank of Nigeria estimates that 60% of Nigerians lack access to adequate housing. Urban areas account for 18 million units of the total deficit, with rural areas representing the remaining 10 million units.
Middle-income housing represents the largest gap, with families earning ₦200,000-₦800,000 monthly unable to access appropriate housing options. High-income housing shows oversupply in certain Lagos and Abuja neighborhoods, while affordable housing remains critically understocked.
The deficit grows by approximately 1 million units annually as household formation outpaces new construction.
How fast is Nigeria's population growing compared to housing supply?
Nigeria's population grows at 2.6% annually, adding approximately 5.4 million people each year, while housing supply increases by less than 0.5% annually.
| Growth Metric | Annual Rate | Actual Numbers |
|---|---|---|
| Population Growth | 2.6% | 5.4 million people added |
| Household Formation | 3.2% | 3.7 million new households |
| Housing Supply Growth | 0.4% | 150,000 units average |
| Urban Population Growth | 4.2% | 3.8 million urban migrants |
| Lagos Population Growth | 6.5% | 1.2 million new residents |
| Abuja Population Growth | 8.3% | 400,000 new residents |
| Construction Completion Rate | 65% | 98,000 completed units |
Lagos experiences the fastest urban growth, with 6.5% annual population increases creating enormous pressure on existing housing stock. Abuja's 8.3% growth rate reflects its status as the capital and business hub.
Rural-to-urban migration accounts for 70% of urban population growth, concentrating housing demand in already constrained markets. Young demographics mean household formation rates exceed population growth as extended families split into nuclear units.
What is the current vacancy rate in Nigerian cities?
Nigeria's major cities maintain vacancy rates between 5-8%, indicating tight housing markets that support continued price increases.
Lagos maintains a 5-6% vacancy rate across all segments, with luxury properties in Ikoyi and Victoria Island showing 8-10% vacancy. Middle-income areas like Maryland, Surulere, and Ikeja show 3-4% vacancy rates.
Abuja's vacancy rate averages 7%, with Maitama and Asokoro showing higher vacancy in luxury segments. Port Harcourt maintains 6% vacancy, while Kano and Ibadan show 8-9% vacancy rates.
Rental properties show lower vacancy than owner-occupied housing, particularly in Lagos where rental vacancy drops to 2-3% in desirable neighborhoods. New developments often achieve 90%+ occupancy within 12 months of completion.
It's something we develop in our Nigeria property pack.
How have property prices changed in the last 12 months?
Nigerian property prices increased by 12-18% in the last 12 months, with Lagos leading at 18% average price growth.
Lagos residential property prices rose from ₦45 million average to ₦53 million for 3-bedroom apartments in middle-income areas. Luxury properties in Ikoyi increased from ₦180 million to ₦210 million average for 4-bedroom units.
Abuja property prices increased 15% annually, with Wuse 2 apartments rising from ₦35 million to ₦40 million. Maitama luxury properties increased from ₦150 million to ₦175 million average.
Port Harcourt saw 14% price increases, while Kano and Ibadan experienced 10-12% growth. The five-year average annual increase across Nigerian cities ranges from 8-14%, with Lagos consistently showing the highest appreciation.
Naira devaluation contributes approximately 4-5% to price increases, while genuine supply-demand imbalances drive the remaining 8-13% growth annually.
Don't lose money on your property in Nigeria
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
How have rental prices changed in the last 12 months?
Nigerian rental prices increased by 15-22% in the last 12 months, outpacing property purchase price growth.
Lagos rental prices show the steepest increases at 20-22% annually. A 3-bedroom apartment in Lekki now rents for ₦3.5-4.2 million annually, up from ₦2.8-3.5 million in 2024. Mainland areas like Ikeja show 18% rental increases.
Abuja rental increases averaged 18%, with Wuse 2 apartments rising from ₦2.8 million to ₦3.3 million annually. Garki and Utako areas show 15-17% rental growth.
Port Harcourt rentals increased 16%, while Kano and Ibadan saw 12-15% growth. The five-year average rental increase across major cities ranges from 12-18% annually, consistently exceeding inflation rates.
Short-term rental markets show even steeper increases, with Airbnb properties in Lagos increasing 25-30% annually. Commercial rentals in prime locations increased 20-25%, reflecting strong business demand.
Rental yield compression occurs as purchase prices rise faster than rents, but absolute rental amounts continue climbing due to supply constraints.
What percentage of income do Nigerians spend on housing?
Middle-income Nigerian households spend 40-60% of their income on housing, significantly exceeding international recommendations of 30%.
| Income Category | Monthly Income Range | Housing Cost Percentage |
|---|---|---|
| Low Income | ₦50,000-₦150,000 | 65-80% |
| Lower Middle Income | ₦150,000-₦400,000 | 50-65% |
| Middle Income | ₦400,000-₦800,000 | 40-55% |
| Upper Middle Income | ₦800,000-₦2,000,000 | 30-45% |
| High Income | ₦2,000,000-₦5,000,000 | 20-35% |
| Very High Income | Above ₦5,000,000 | 15-25% |
| National Average | All Income Levels | 45% |
In Lagos, housing costs consume 45-65% of middle-income household budgets, up from 35-50% in 2015. Abuja households spend 40-55% of income on housing, while Port Harcourt residents allocate 35-50%.
The housing burden increased dramatically over the past decade as salary growth averaged 8-10% annually while housing costs rose 12-18% annually. Young professionals in Lagos often share accommodations or live in peripheral areas to manage costs.
First-time buyers typically require 8-12 years to save for down payments, extending homeownership timelines significantly compared to previous generations.
How many building permits were approved and completed last year?
Nigerian authorities approved approximately 185,000 building permits in 2024, but only 65% or 120,000 units reached completion.
Lagos State issued 75,000 building permits in 2024, with a 70% completion rate resulting in 52,500 finished units. Approval processing takes 6-18 months depending on project size and location.
Abuja issued 28,000 permits with 68% completion, delivering 19,000 units. Rivers State approved 15,000 permits with 60% completion, while Ogun State issued 12,000 permits with 65% completion.
Completion delays result from financing challenges, infrastructure constraints, and regulatory bottlenecks. Private developers achieve 75-80% completion rates, while government projects show 45-55% completion rates.
Processing backlogs exist in most states, with Lagos maintaining 6-month average processing times and Abuja showing 4-month averages. Smaller states often take 8-12 months for permit approvals.
The gap between permits and completions contributes to housing supply shortages and supports continued price increases.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Nigeria versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What government policies affect housing construction?
Nigerian government policies create mixed impacts on housing construction through incentives, regulations, and infrastructure programs.
The National Housing Programme targets 300,000 annual units through public-private partnerships, mortgage subsidies, and land allocation. The Federal Housing Authority provides land at discounted rates and infrastructure support for qualified developers.
State-level policies vary significantly, with Lagos implementing streamlined approval processes and infrastructure co-funding. The Lagos State Resident Registration Agency (LASRRA) program provides title documentation support, while Abuja offers tax incentives for affordable housing projects.
Restrictive policies include complex land acquisition procedures, multiple agency approvals, and high infrastructure levies. Building code enforcement creates compliance costs but improves construction quality.
The Central Bank of Nigeria's Real Estate Development Fund provides single-digit interest rate loans to qualified developers. Import duty waivers on construction materials support cost reduction, while forex challenges limit material availability.
It's something we develop in our Nigeria property pack.
How much foreign investment affects Nigeria's property market?
Foreign and diaspora investment accounts for 25-35% of high-end property purchases in Lagos and Abuja, significantly impacting supply and pricing.
Nigerian diaspora buyers represent 60% of foreign investment, purchasing primarily in Lekki, Victoria Island, and Abuja's Central Business District. American and European Nigerians drive luxury market demand, with average purchase budgets of $200,000-500,000.
Non-Nigerian foreign investment focuses on commercial properties and luxury residential developments. South African, Lebanese, and Chinese investors participate actively in development projects rather than individual purchases.
Foreign investment drives price premiums of 15-25% in targeted neighborhoods, creating affordability challenges for local buyers. Developers often pre-sell 40-60% of luxury units to diaspora buyers before completion.
Investment patterns concentrate in specific areas, leaving middle-income segments primarily to domestic buyers. This segmentation helps explain price variations across different property categories and locations.
Currency hedging motivations drive some diaspora investment, as property provides naira exposure and inflation protection for overseas earnings.
What proportion of Nigeria's housing stock is outdated?
Approximately 35-40% of Nigeria's existing housing stock requires significant renovation or replacement to meet modern living standards.
Lagos contains roughly 800,000 units built before 1980 that lack modern infrastructure, proper drainage, or adequate electrical systems. Surulere, Mushin, and parts of Lagos Island contain the highest concentrations of aging housing stock.
Abuja's older sections, particularly Garki Phase 1 and Wuse Zone 1, contain 150,000 units requiring upgrades. Port Harcourt's Trans-Amadi and Diobu areas contain significant portions of substandard housing.
Rural housing shows higher obsolescence rates, with 60-70% of units lacking modern amenities. However, rural-to-urban migration reduces pressure on rural housing while increasing urban demand.
Slum settlements in major cities house 12-15 million people in substandard conditions. Lagos slums like Makoko, Badia, and Agege accommodate 2.5 million residents in inadequate housing.
Urban renewal programs target obsolete housing for redevelopment, temporarily reducing supply while creating long-term improvements. These programs often displace low-income residents to peripheral areas.
How does affordable housing supply compare with middle-income demand?
Affordable housing supply meets only 15-20% of middle-income demand across Nigerian cities, creating severe shortages that drive price increases.
Middle-income households earning ₦200,000-₦800,000 monthly require approximately 2.5 million housing units nationwide, but only 400,000-500,000 appropriate units exist. Lagos needs 600,000 middle-income units but contains only 120,000 suitable properties.
Developers focus on luxury segments with higher profit margins, delivering 10 luxury units for every 3 middle-income units. Construction costs favor high-end development, as material and labor costs remain similar regardless of final selling price.
Government affordable housing programs target lower-income segments, leaving middle-income buyers in a gap between expensive private developments and subsidized public housing. The National Housing Fund provides limited relief for middle-income buyers.
Mortgage accessibility challenges compound supply shortages, as banks require 30-50% down payments and offer limited long-term financing. Middle-income buyers often resort to rent-to-own arrangements or delayed homeownership.
It's something we develop in our Nigeria property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Nigeria's housing deficit of 28 million units creates persistent upward pressure on property prices across all major cities, making real estate investment attractive but homeownership challenging for middle-income families.
With household formation outpacing new construction by 18:1 and government housing programs falling short of targets, the supply-demand imbalance will likely continue driving 8-15% annual price increases in Lagos, Abuja, and other major cities through 2025-2027.
Sources
- Zillow Group - US housing deficit analysis
- ONS - UK Housing Statistics
- World Bank - Adequate Housing Index
- Land Tech - Housing Construction Analysis
- IBISWorld - Household Formation Statistics
- Camoin Associates - Housing Shortage Solutions
- Middleburg - Household Formation Research
- BBC - Housing Market Analysis