The Cost of Building a House or Buying a House in Nigeria

The process of determining a property’s market value—that is, the amount it would fetch in an open market transaction—is known as property valuation. Like in many other nations, property valuation in Nigeria is influenced by several factors. Both buyers and sellers can make more educated selections if they are aware of these aspects. These are the important things to think about:

1. Location

The proverb is equally applicable in Nigeria as it is elsewhere. Arguably, the most important aspect influencing a property’s value is its location. Properties in desirable locales, including city centres or places with excellent infrastructure, typically fetch higher prices. The closeness of services, educational institutions, transit hubs, and neighbourhood safety are all important considerations.

2. Property Size and Layout

Another important consideration is a property’s size. Larger properties are typically valued higher, both in terms of built-up area and land area. A property’s layout and design can also affect its value. Modern, well-designed homes frequently sell for more money than ones with outmoded floor plans or inadequate designs.

3. Condition of the Property

One of the main factors affecting a property’s value is its general state. Properly kept homes with no need for repairs or improvements typically fetch a higher price. The condition of the property is influenced by various factors, including its age and the quality of the roof, plumbing, and electrical systems.

4. Market Trends and Demand-Supply Dynamics

Like any other industry, the Nigerian real estate market is driven by supply and demand. When demand is strong and supply is limited, real estate values typically increase. On the other hand, property values can stagnate or even drop in a market where there is an abundance of supply and little demand. Maintaining a current understanding of market developments is essential for precise valuation.

5. Comparable Sales

The method of Comparative Market Analysis (CMA) is frequently employed in property appraisal. Finding a fair market value for a property entails examining recently sold properties in the same neighbourhood that have comparable features (such as size, layout, and condition). This technique aids in estimating the likely price range that a property will fall within.

6. Economic and Political Factors

Property values can be greatly impacted by political and economic stability. Property prices in Nigeria can be influenced by variables like interest rates, inflation rates, and real estate-related government regulations. Monitoring these macroeconomic indicators is crucial.

7. Special Features and Amenities

An asset’s worth can be increased by special features or services. These could be features like a smart home system, a well-kept landscape, a swimming pool, or fine finishes. These extra features have the power to distinguish a property from others in the neighbourhood and raise its possible market value.

8. Legal and Regulatory Considerations

A property’s value may be impacted by matters about property rights, zoning laws, and land ownership. In general, properties with properly recorded titles are worth more. Legal problems may result in lower appraisals or even make a property unsellable.

The Cost of Building a House or Buying a House in Nigeria

There are different types and sizes of houses you can buy in Nigeria. One fact you should note is that the bigger the house, the bigger the cost and prices. We’ll classify them and present the prices and costs to you.

1. Three Bedroom Bungalow

To build a three-bedroom bungalow in rural and semi-urban areas, you should keep a budget of 15 to 20 million naira. This might include the land in case it’s a plot of around 2 million naira. It can be as little as 10 million nairas if there is land and labour in your area is cheaper.

By three-bedroom bungalow, we mean three bedrooms plus a sitting room, dining area, kitchen, two toilets, a bathroom, and two verandahs. This estimate doesn’t include the fencing and gates. The fencing and gates are expenses on their own. However, wiring, painting, roofing, windows, ceiling, soak away, and others are included.

If you want to buy a completed one, it can be more expensive because the seller would add his own profit. You should hold extra 2 million to 5 million naira in case you want to buy an already completed one.

In addition, the more expensive your taste and finishing, the more the money. A three-bedroom bungalow can be built for 10 million nairas, 12 million naira, 15 million naira, 18 million naira, 20 million naira, and even as high as 25 million naira depending on your taste and finishing as well as location.

2. Four Bedroom Bungalow

Four bedroom bungalow is just adding one additional bedroom to three bedroom bungalow plan, and expanding the house. The cost is not so different, though. For this one you keep a budget of around 16 million to 20 million naira. The cost difference might just be a million naira from three bedroom bungalow. Be reminded that location matters.

3. Five and Six Bedroom Bungalow

You should hold a budget of 18 million to 22 million naira for this large house. It might even cost more because you would have to add toilet and bathroom. You’ll also have to add am additional smaller kitchen compared to the main kitchen.

You don’t have to spend this large amount of money building this type of house, instead you should use that amount to divide the large building into two blocks of two bedroom flats. In the next section, you’ll discover the cost of this.

4. Two Blocks of Two Bedroom Flat Bungalow

When we saw two blocks of two bedroom flat bungalow, we mean a building divided into two equal halves where each half is an apartment of two bedroom flat. Each flat has a sitting room, dining, two bedrooms, a toilet, a kitchen, a verandah, and bathroom. The cost of building this is about 20 million to 25 million naira.

We advise that instead of building six rooms bungalow, you should add extra money and build these blocks of flat. It will yield more money for you, and save cost of repairs in the future.

However, you have to ensure that your land and the location is an urban or semi-urban area before building this. If you build this a rural location, your family will be the only one to live in it. This is the same for all flats and self-contained apartments buildings to be listed here.

5. Two Blocks of Three Bedroom Flat Bungalow

In case you want to add one more room to the no. 4 discussed, it will lead to a higher cost. However, if you are renting it out, you make your money back. You should have a budget of 23 million naira to 28 million naira for this.

6. A Duplex Storey Building

In the literal sense and meaning of the word duplex, it is supposed to be a house divided into two halves for different families usually having eight to fourteen rooms. However, in the Nigeria context, a duplex is a storey building of about six to ten rooms.

This building is built by the rich for their personal use. The ground floor contains the sitting room, dining, kitchen, visitors room, stores, servants room, and some others. The first and up floor contains the master’s bedroom, children’s room, smaller sitting room, smaller dining, and so on. It is usually built for comfort. It has various designs and finishing, depending on the builder’s taste.

This type of house costs about 35 to 45 million naira to build.

7. Mansion

This mansion is more of like the definition of Nigeria’s understanding of duplex. It is usually a house of two storeys or more buildings with more than 10 rooms. What classifies a mansion is not exactly the size but the standard, finishing, beauty, and its size of land.

You can easily spot a mansion by its design and beauty. It is large and also well-furnished with accessories like a large land, a swimming pool, gym, tennis court, basket ball court, animal house, security quarters, and for Nigeria, most importantly, a generator house.

Finishing and designs takes most of the budget of this house. You should hold around 80 million to 150 million naira to build this type of house. This cost includes all that you have to add and install in the house.

8. A One-Storey Building of Four Flats

For this, we assume the flats are three-bedroom flats. The cost of building this house is 35 million to 45 million naira.

9. Two-storey building of Six Flats

You should keep a budget of 45 million naira to 50 million naira.

10. Three-storey building of Eight Flats

Here, you should put aside a budget of 50 million to 60 million naira.

12. A Bungalow of 10 Self-contained Rooms

This type of house should be built in a student area, or places with lots of single people, you will rent out the houses very fast. For this type of house, it is profitable to build. You should make a budget of 30 million naira excluding the land.

13. A One-Storey House of 20 Self-contained Rooms

This one will also be good in a student or singlehood-dominated area. You should hold a budget of 55 million naira for this excluding the cost of the land.

14. A Two-Storey House of 30 Self-Contained Rooms

You should hold a budget of around 75 million naira for this excluding the cost of the land.

Ways to Finance a House Purchase in Nigeria

In Nigeria, mortgage loans are a popular means of funding home purchases. Through these loans, people are able to borrow money from banks with the express intent of using it to purchase a house. The maximum loan amount is determined by a number of variables, including the applicant’s credit history and income.

For people who may not meet the requirements for a conventional mortgage loan, rent-to-own programs offer an alternate source of funding. In this kind of agreement, prospective homeowners rent a property with the chance to buy it later. A percentage of rent is used to increase the property’s equity, which will eventually make obtaining ownership simpler.

When buying a home in Nigeria, one may also utilize investments and personal savings as a source of funding. People can save up enough money over time or invest in assets that increase in value to either make a sizable down payment or pay for the cost of a property altogether.

Finally, some people ask their friends and relatives for help in paying for their home purchase. This can entail taking out loans from close friends and family members or getting gifts or inheritances that can be used to buy real estate.

In Nigeria, buying a home can be financed in a number of ways, such as through mortgage loans, rent-to-own programs, individual savings and investments, and help from friends and family. Before deciding on their housing investment, prospective homeowners should thoroughly consider all of these possibilities.

Home Mortgage Loans

Nigeria offers three different types of mortgage loans: government-backed, adjustable-rate, and fixed-rate mortgages. While interest rates on adjustable-rate mortgages fluctuate over time, fixed-rate mortgages offer a consistent interest rate throughout the duration of the loan. Institutions like the Federal Mortgage Bank of Nigeria (FMBN) offer government-backed mortgages, which offer qualified borrowers advantageous terms.

People in Nigeria have to fulfil several requirements in order to be qualified for a mortgage loan. This usually entails having a reliable source of income, having sufficient funds to put down on a home, and having a clean credit record. When determining eligibility, lenders may also take into account variables like debt-to-income ratio and stable employment.

Interest rates for mortgage loans in Nigeria can differ based on a number of variables, such as the borrower’s creditworthiness, the lender’s rules, and the state of the market. Monthly payments are dispersed across a repayment period of 10 to 30 years on average. It is imperative that consumers thoroughly go over these conditions prior to signing a home loan contract.

Rent-to-Own Schemes

In Nigeria, rent-to-own programs provide an alternate route to property ownership. A property can be rented by potential purchasers with the opportunity to buy it later. This enables people to establish credit and save for a down payment while obtaining a property. But there are benefits and drawbacks to these plans that need to be properly evaluated.

In Nigeria, the Federal Mortgage Bank of Nigeria (FMBN) Rent-to-Own scheme is a well-liked rent-to-own initiative. It strives to increase accessibility to homeownership by offering reasonably priced housing options with adjustable payment schedules. Private real estate developers provide another noteworthy service that lets renters pay monthly rent increases to progressively gain equity in their rental properties over time.

Note: Keep in mind that this text will be a part of a longer blog article, so avoid summarizing or integrating this subheading material with an introduction or conclusion.

Personal Savings and investments

The value of personal savings when buying a home: Setting aside money for a down payment is essential. It enables people to make a sizeable down payment, which lowers the total amount borrowed and lowers interest rates and monthly payments.

Stocks, bonds, and mutual funds are a few financial possibilities to take into account while looking for ways to finance the purchase of a home. These may eventually yield larger returns and help you achieve your objective of purchasing a home.

Methods to increase personal savings for a down payment on a home: Make a budget that gives regular monthly saves top priority if you want to optimize your personal savings. Reduce needless spending and look into other sources of money. To guarantee regular deposits free from spending temptations, think about automating contributions to your savings account.

Family and friends support

Family and friends can be an invaluable source of help when it comes to financing the purchase of a home. They might be prepared to lend you money or give you a present in order to help you buy the house of your dreams. When getting money from loved ones, it’s important to think about the legal ramifications. To prevent future misunderstandings and disputes, it is imperative to have precise agreements and documentation in place. It’s important to keep up good contacts with family and friends when looking for financial support. One of the most important strategies to make sure that your relationships stay intact during this process together is to practice open communication, gratitude, and respect for limits.

Tips for Cost Savings When Buying Houses in Nigeria