An Analysis of the Effect of Inflation on GDP and Housing Market Dynamics in Nigeria
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Background of the Study:
Inflation is a critical economic variable that influences multiple sectors, including overall GDP performance and the housing market. In Nigeria, high inflation rates have far-reaching effects that extend beyond the erosion of consumer purchasing power; they also impact the affordability and demand for housing, which is a key component of economic growth. While GDP growth is often seen as a positive indicator, inflation can distort this growth by reducing real incomes and affecting investment in the housing sector (Afolabi, 2023). Over recent years, fluctuations in inflation have been linked with significant shifts in housing market dynamics—ranging from rising property prices to decreased affordability for lower-income groups. These trends have implications for both economic development and social stability (Babatunde, 2024). This study investigates the effect of inflation on GDP performance and housing market dynamics in Nigeria by reviewing historical data, policy measures, and market trends. The goal is to understand how inflationary pressures modify economic output and alter the structure of the housing market, thereby influencing overall economic development (Chinaza, 2025).
Statement of the Problem:
Nigeria continues to experience high inflation, which poses challenges for both GDP growth and housing market stability. The adverse effects of rising prices have led to increased housing costs and reduced affordability, impacting economic growth and social equity. Despite various policy measures aimed at controlling inflation, its persistent nature continues to undermine the benefits of GDP expansion and disrupt the housing market. This study seeks to explore the mechanisms by which inflation affects these critical areas and to identify potential policy remedies (Ibrahim, 2023).
Objectives of the Study:
- To examine the relationship between inflation and GDP in Nigeria.
- To analyze the impact of inflation on housing market dynamics.
- To propose policy interventions to mitigate the adverse effects of inflation on the economy and housing sector.
Research Questions:
- How does inflation affect GDP growth in Nigeria?
- What is the impact of inflation on housing market dynamics?
- What policy measures can reduce the negative effects of inflation on these sectors?
Research Hypotheses:
- H1: High inflation negatively impacts GDP growth.
- H2: Inflation significantly increases housing market prices.
- H3: Coordinated policy measures can mitigate the adverse effects of inflation on GDP and the housing market.
Significance of the Study:
This study is significant because it evaluates the impact of inflation on key economic indicators such as GDP and the housing market. The insights gained will help policymakers design targeted interventions that foster economic stability and improve housing affordability, thereby contributing to sustainable development in Nigeria (Okeke, 2024).
Scope and Limitations of the Study:
This study is limited to analyzing the effect of inflation on GDP and housing market dynamics in Nigeria and excludes other economic sectors.
Definitions of Terms:
• Inflation: The sustained increase in the general price level of goods and services.
• GDP: The total value of goods and services produced in Nigeria.
• Housing Market Dynamics: The trends and fluctuations in the real estate market, including pricing and demand.
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