Rising Interest Rates: The Silent Killer of Real Estate Ambitions

ESV Charles Niyi Famuyiwa

Across Nigeria’s property landscape, rising interest rates are quietly suffocating growth and ambition. What was once a promising avenue for wealth creation and urban development is now weighed down by the soaring cost of borrowing. For many aspiring homeowners and developers, the dream of owning or building property is fading fast under the pressure of escalating lending rates.

Real estate depends heavily on access to credit. Developers need financing to execute projects, while buyers rely on mortgages to afford homes. But with interest rates at record highs, partly due to the Central Bank of Nigeria’s tightening monetary policies, these ambitions are being derailed. Commercial bank lending rates now hover around 25–30 percent, making loans for real estate projects nearly impossible to sustain. The immediate effect is evident: stalled developments, inflated property prices, and an even wider housing deficit that already exceeds 20 million units.

For developers, rising rates have distorted the economics of construction. Financing costs have skyrocketed, forcing many to abandon projects midstream or delay completion indefinitely. Those who continue often shift focus to luxury developments that target the wealthy, as only high-end buyers can afford the inflated prices needed to offset loan expenses. The result is an unbalanced market that caters to a privileged few, while affordable housing desperately needed by the majority remains a distant ideal.

For potential homeowners, the situation is equally dire. Mortgage rates have surged to levels that make repayment nearly impossible for the average Nigerian worker. A family that once dreamed of owning a modest home now faces monthly payments that consume most of its income. This has pushed many Nigerians into long-term renting, deepening social inequality and stifling aspirations of financial independence.

The ripple effect of rising interest rates extends beyond individuals and developers—it affects the broader economy. Construction activities have slowed dramatically, leading to job losses across the value chain. Artisans, builders, suppliers, and real estate agents are all feeling the pinch. Additionally, foreign and local investors, deterred by poor returns and high financing costs, are redirecting capital to less risky ventures, further draining liquidity from the sector.

Yet, amid this crisis, opportunities exist for innovation and reform. The government and financial institutions must adopt creative financing models to reduce dependence on expensive credit. Real Estate Investment Trusts (REITs), cooperative housing schemes, and rent-to-own programs can help democratize access to property ownership. Similarly, tax incentives and lower-interest facilities for developers focusing on affordable housing could revive construction and stimulate demand.

Developers can also adapt by embracing cost-efficient construction techniques such as modular housing and local material sourcing. Technology-driven solutions like digital land registries and proptech crowdfunding platforms can also open new doors for smaller investors and ease transaction processes.

Ultimately, rising interest rates have exposed the fragility of Nigeria’s real estate structure. Without deliberate policy interventions and innovative financing options, the dream of homeownership will remain out of reach for millions.

If the government truly wants to build an inclusive economy, it must find ways to make housing finance affordable again. Otherwise, rising interest rates will continue to quietly destroy the very foundation of Nigerians’ real estate ambitions.

Famuyiwa, a registered estate surveyor and valuer