A Study on the Effect of GDP, FDI, and Inflation on Housing Prices in Nigeria
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Background of the Study
Housing prices in Nigeria have emerged as a critical indicator of economic well-being, reflecting both market dynamics and macroeconomic conditions. Gross Domestic Product (GDP), FDI, and inflation are instrumental in determining the trends in housing markets. GDP growth indicates overall economic prosperity, while FDI brings in capital that can stimulate construction and real estate development (Adeyemi, 2023). Conversely, inflation can affect housing affordability and investment returns, leading to fluctuations in property values (Okoro, 2024). The interrelationship among these variables is complex; robust GDP growth and attractive FDI can drive demand for housing, yet inflation may offset these positive trends by increasing costs and reducing purchasing power. Recent market analyses suggest that understanding this triadic relationship is essential for developing housing policies that promote affordability and stability (Balogun, 2025). This study investigates how the combined effects of GDP, FDI, and inflation shape housing prices in Nigeria by examining historical trends, policy impacts, and market sentiment. It aims to provide insights that can help stabilize the housing market in a rapidly changing economic environment.
Statement of the Problem
The Nigerian housing market is characterized by volatile price fluctuations, influenced by macroeconomic variables such as GDP, FDI, and inflation. Despite periods of economic growth and significant foreign investment, housing affordability remains a challenge due to the countervailing effects of inflation (Adeyemi, 2023). The lack of a coherent understanding of how these factors interact has hindered effective policy formulation, resulting in market instability and speculative pricing (Okoro, 2024; Balogun, 2025).
Objectives of the Study
- To assess the impact of GDP growth on housing prices.
- To analyze the role of FDI in stimulating the housing market.
- To examine how inflation influences housing price dynamics.
Research Questions
- How does GDP growth affect housing prices in Nigeria?
- What is the impact of FDI on the real estate market?
- How does inflation alter housing affordability and price trends?
Research Hypotheses
- GDP growth has a positive effect on housing prices.
- FDI inflows stimulate increases in housing market values.
- Inflation negatively impacts housing affordability, leading to higher volatility in prices.
Significance of the Study
This study is significant as it explores the multifaceted impacts of GDP, FDI, and inflation on housing prices in Nigeria. The insights derived will help policymakers and stakeholders in the real estate market to develop strategies that promote housing affordability and market stability (Adeyemi, 2023; Okoro, 2024; Balogun, 2025).
Scope and Limitations of the Study
This study is limited to examining the effects of GDP, FDI, and inflation on housing prices in Nigeria. It focuses solely on these variables without exploring other potential determinants of housing market dynamics.
Definitions of Terms
• GDP (Gross Domestic Product): The total market value of all goods and services produced within a country.
• FDI (Foreign Direct Investment): Investments made by foreign entities in the domestic economy.
• Housing Prices: The market value of residential properties as determined by supply and demand dynamics.
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