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Should you keep paying rent or take the plunge to buy a house in Nigeria?

It’s a question many Nigerians grapple with, especially as we head through 2025 with a lot of changes in the economic landscape. Homeownership is a dream for many, but with property prices, interest rates, and inflation on the rise, renting can sometimes seem more practical. On the other hand, owning a home can build wealth over time and provide stability. In this article, we’ll break down renting vs buying in Nigeria as of 2025, looking at the advantages and disadvantages of each, and the key financial factors (like mortgages and inflation) you should consider. By the end, you’ll have a clearer picture of whether you should rent or buy a house in Nigeria right now.

Pros and Cons of Renting in Nigeria

Renting is the path most young Nigerians start with, and for good reasons. Here are the key pros of renting:

Lower Upfront Cost: Renting a home requires significantly less money upfront than buying. You typically need a refundable security deposit and 1 or 2 years of rent paid in advance (annual advance payment is common in Nigeria). This is far more attainable for most people than the multi-million Naira down payment needed to buy. For example, renting a decent 2-bedroom flat in Lagos might cost ₦1 million per year, whereas buying a similar flat could require ₦30–50 million or more in cash or mortgage.
Flexibility: Renters have the flexibility to move more easily. If your job transfers you to Abuja from Lagos, or you want to relocate to a different neighborhood, it’s simpler (and cheaper) to pack up and change rentals than to sell a house. In the fast-evolving Nigerian job market, this flexibility is a big plus, especially for young professionals.
No Maintenance Headaches: When you rent, major property maintenance and repairs are typically the landlord’s responsibility (though day-to-day utilities and minor fixes might fall on you). You’re not on the hook for replacing a roof, fixing structural issues, or dealing with expensive renovations – a relief given how costly building materials are now (cement prices, for instance, have more than doubled in recent years).

However, renting has its cons:

No Equity, No Investment: The biggest downside is that your rent money isn’t building equity. It goes to the landlord, and at the end of the day you don’t own an asset. Over, say, five years of paying rent, you could easily spend ₦5–10 million (especially in a city like Lagos or Abuja) and financially have nothing to show for it in terms of ownership.
Rent Increases: Nigeria has experienced high inflation and housing demand, which means rents have been rising steeply. In Lagos, rents surged by an average of 91% over the last five years. To put this in perspective: areas like Yaba and Lekki saw rents jump about 40–50%, while Surulere’s average rent more than doubled (a 133% increase) between 2019 and 2024. As a renter, you’re exposed to these increases at the end of each lease term – your landlord can hike the rent, and you might have no choice but to pay or move out.
Less Stability: With renting, there’s always a bit of uncertainty. Landlords can decide to not renew your lease, or sell the property, or in some cases you might have to deal with a difficult landlord or inadequate maintenance. There’s also the recurring hassle of renewing rent annually (sometimes requiring lump sum payments which can be stress-inducing to save up for each year).

In summary, renting is easier to start and offers flexibility, but it lacks the long-term financial benefits of ownership and can become more expensive over time due to rent hikes.

Pros and Cons of Buying in Nigeria

Buying a home – whether an apartment, a house, or a piece of land to build on – is a major milestone. Here are the key pros of buying:

Building Equity and Wealth: When you buy a property, your monthly payments (mortgage instalments, if you have a loan, or the opportunity cost of your lump sum) go into an asset that can appreciate. Over time, real estate in Nigeria tends to increase in value, especially in growing cities. Instead of paying a landlord, you’re essentially paying yourself by building equity in your home. Down the line, you could even leverage that equity (through resale or renting it out) for financial gain. It’s a form of forced savings – you invest in an asset rather than spend on rent.
Stability and Freedom: Homeownership gives a sense of stability. You don’t have to worry about a landlord asking you to move. You can make improvements or renovations as you please (paint the walls, install solar panels, etc.) without needing permission. For people with families, owning a home means you can put down roots in a community and not worry about moving when leases end.
Protection Against Rent Inflation: If you lock in a fixed-rate mortgage, your monthly payment is relatively predictable (notwithstanding variable rates for some loans or adjustments). This can protect you from the kind of rent surges we’ve seen recently. For instance, rather than your rent going up 10-20% every couple of years, you could be paying the same mortgage installment while others’ rents are climbing. Additionally, during high inflation, while general prices rise, having your money parked in property can be a good hedge – property values and rents typically go up with inflation, meaning the real value of your fixed mortgage debt may actually diminish over time.

That said, consider the cons of buying:

High Upfront and Transaction Costs: Buying property in Nigeria is very cash-intensive. Mortgages are not easily accessible to everyone (more on this below), so many transactions require large cash outlays. Even if you take a mortgage, banks often demand 20–30% down payment. On a ₦50 million home, that means ₦10–15 million upfront plus closing costs (legal fees, agency commission, title registration, etc., which can be another ~10%). These hurdles put buying out of reach for many. Transaction costs like stamp duty, consent fees, and agent commissions can amount to several million Naira on their own (often an additional 5–10% of the property price).
Mortgage Challenges – High Interest Rates: Unlike many Western countries where mortgages might come at single-digit interest rates, in Nigeria mortgage loans are expensive. In 2025, typical mortgage interest rates hover between 18%–25% per annum. This is incredibly high – for context, a 20-year loan at 20% interest means you’ll eventually pay back many times the original loan amount in interest alone. High interest makes monthly payments very steep. For example, a ₦30 million mortgage at 20% could mean monthly payments on the order of ₦500k or more, which is higher than rent for an equivalent property in many cases. It’s a major reason why most Nigerians do not finance homes through long-term bank mortgages (banks also often limit mortgage tenors to about 10 years in practice). Without specialized low-interest programs, buying with financing can feel like an uphill battle.
Maintenance and Ongoing Costs: When you own a home, you bear all the upkeep costs. In Nigeria, that includes not just fixing wear and tear, but often providing your own utilities – running a generator for electricity, installing boreholes or pumping water, hiring security for the street, etc. These costs add up. There’s also annual property charges like Land Use Charge (for example in Lagos) that owners pay. A renter might not directly pay for some of these (sometimes landlords factor them into rent or handle major repairs). As an owner, you must budget for routine maintenance (painting, plumbing fixes) and unexpected repairs (e.g. a bad roof, which could cost millions of Naira to replace).
Reduced Flexibility: Owning a home can tie you down. If a big job opportunity arises in another city or abroad, it’s not easy to quickly sell or rent out your house (the property market can be illiquid – houses in Nigeria can take months or years to sell at a good price). Selling under pressure might mean accepting a loss. Thus, buying makes the most sense if you plan to stay put in that location for a while (commonly at least 5-7 years or more to really reap financial benefits and cover transaction costs).

In summary, buying is a long-term commitment with high upfront costs, but it offers the payoff of owning an asset that can grow in value and eventually free you from the cycle of rent payments. It’s generally better for those who are financially stable and plan to settle in one place.

Key 2025 Factors: Interest Rates, Inflation, and Market Trends

The rent-vs-buy decision in Nigeria right now is heavily influenced by the broader economic context. Let’s look at a few key factors in 2025:

Interest Rates at Record Highs: As mentioned, borrowing money to buy a house is costly in Nigeria. The Central Bank’s benchmark interest rate is at one of its highest points in decades (over 18% as of early 2025, and some measures even put policy rates above 25%). Commercial banks in turn lend mortgages at 18-25%. This significantly tilts the scale towards renting for those who would need a loan.

For example, if you consider a property of ₦50 million: renting it might cost ~₦3–4 million per year (perhaps a nice 3-bed in a good area), whereas buying with a 80% mortgage would involve not just a ₦10M down payment, but interest payments of about ₦8M+ per year initially, on top of principal repayment – making the monthly outflow far higher than rent. Unless you expect property values or rents to skyrocket further, paying that level of interest is hard to justify in purely financial terms. This is why, currently, many Nigerians either remain renters or seek alternative financing (like cooperative loans, developer payment plans, or purchasing land to build gradually).
Inflation and Cost of Living: Nigeria’s inflation has been high (double digits through 2024 and 2025). The cost of building materials has surged, which drives up property prices. High inflation also erodes the value of cash savings. If you leave your money in the bank, it might lose value, whereas putting it in real estate can preserve value.

Owning property can be a hedge against inflation – as prices rise, so do rents and property values typically. This argues in favor of buying if you have the means, because it locks your money into a tangible asset. On the flip side, high inflation without commensurate salary increases makes it harder for people to afford down payments or keep up with mortgage payments (salaries don’t stretch as far when food and transport costs are also rising). So it’s a bit of a double-edged sword.
Rising Rents: As highlighted earlier, rents have been jumping in many cities. Lagos, Abuja, Port Harcourt – all have seen significant rent hikes in recent years due to demand outpacing supply and devaluation of the Naira making landlords seek higher nominal rents. If you expect rents to continue rising sharply, buying sooner could save you money long-term. For instance, if your rent is ₦1M now but goes up 15% each year, in 5 years you’d be paying roughly ₦2M. Some people choose to buy to “lock in” their housing cost (aside from maintenance and taxes) and not worry about such increases. However, this only makes sense if you can actually afford to buy or qualify for those new lower-rate mortgages being talked about.
Government Housing Initiatives: A notable development in 2025 is the government’s effort to make mortgages more accessible. The federal government announced a ₦1 trillion ($650 million) housing fund aimed at providing low-interest, long-term mortgages. The plan is to offer single-digit or low double-digit interest rate loans for up to 25 years – a huge improvement over normal bank terms. If this materializes and you qualify, the calculus could change in favor of buying.

For example, a 25-year loan at, say, 9% would have much more affordable payments than a 10-year loan at 20%. The program is still in early stages, but it signals that buying may become more feasible for the middle class in the near future. Keep an eye on such initiatives, as they could tip the balance.
Cultural and Personal Considerations: In Nigeria, owning a home is not just a financial decision but also a cultural one. It’s often seen as a mark of success and security. Many people feel that paying rent is “wasting money” when you could be paying towards ownership. There’s truth to that sentiment, but it should be weighed against the very real financial strain buying can put on you. For some, the psychological comfort of owning (and not dealing with a landlord) is worth the sacrifice. For others, the freedom and lower stress of renting (no huge debt, ability to relocate) is more valuable during certain life stages.

Should You Rent or Buy a House in Nigeria Right Now?

There’s no one-size-fits-all answer – it depends on your financial situation, life goals, and the specific market you’re in. But we can offer some general guidance:

When Renting Makes More Sense: If you’re early in your career or unsure about your long-term plans (job, city, etc.), renting is likely the better choice. It gives you agility. Also, if you haven’t accumulated substantial savings, renting while you save up more is prudent. You generally don’t want to commit to a mortgage that stretches your budget too thin.

A common recommendation is that housing costs (rent or mortgage) should not consume more than about 30% of your monthly income. In Nigeria’s high-interest environment, many mortgages would violate this rule for middle-income earners. Until interest rates come down or you earn significantly more, renting might be wiser. For example, a civil servant or entry-level bank worker may find that renting a modest place for now and investing savings in other assets (or further education) yields better returns than trying to buy with a costly mortgage.
When Buying Makes More Sense: If you have a stable job, plan to live in the same city for the foreseeable future, and have the financial means (either via savings for a down payment or access to a good financing deal), buying can be a great move. This is especially true if you can snag one of the newer lower-rate mortgages or if you can buy in cash or with minimal loan. Owning property in prime areas can be very rewarding long-term. Lagos, Abuja, and other growing cities see property values trending upward due to urbanization.

If you buy a house now, in 10 years its value could be significantly higher, and you’ll have escaped the cycle of annual rent payments. Another scenario favoring buying is if you’re looking at an investment property – e.g., buying a flat to rent out. Rental yields in some Nigerian cities can be fairly high (often above 5-8%, and in some cases over 10% of property value annually as rent). If you can buy and then have tenants essentially pay off your mortgage via rent, that’s a win (though note being a landlord comes with its own challenges).
Hybrid Approaches: Some Nigerians opt for a middle ground: for example, buying land and building gradually (pay-as-you-go construction) while renting in the interim. This way, they avoid large loans and can use incremental income to eventually become homeowners. It takes time, but it’s a tried-and-true method in a high-interest environment. Others might invest in a smaller property (like a studio or a plot in an emerging area) as a way onto the property ladder, while they themselves continue to rent a place that suits their current needs.

In 2025, given the current data, renting is financially logical for many people due to the prohibitive cost of borrowing. However, if you are in a position to buy without crippling debt – especially if you find a bargain property or qualify for a favorable mortgage – then buying sooner rather than later could save you from future price increases and put you on the path to owning an asset.

To decide, do the math for your case: compare the annual cost of renting the kind of home you want vs. the annual cost (mortgage payment + maintenance + taxes) of owning that home. Consider your expected length of stay. If you find that owning will cost, say, twice as much per month as renting, ask if the difference is worth it for you in terms of equity and peace of mind. Sometimes, it might be better to invest the difference in other ways and revisit buying in a few years.

Bottom line: If you can comfortably afford a home (and have done your due diligence on the property’s title!), buying is generally worth it for the long term – it shields you from rent inflation and gives you an asset. But if buying would leave you financially strained or require untenable loans, don’t rush – renting is not “throwing away money” if it buys you flexibility and financial breathing room. Given how dynamic Nigeria’s economy is, staying agile can be an advantage.

Keep an eye on economic signals: if interest rates start coming down or new housing schemes launch, the buy-vs-rent equation could shift. And always ensure whichever route you take, you’re living within your means and planning for the future.