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Drivers of Nigeria’s real house prices: long-run analysis and short-run dynamics

Paul Chinedu Okey (Department of Estate Management, University of Nigeria, Enugu, Nigeria)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 15 September 2023

39

Abstract

Purpose

The purpose of this paper is to assess the long-run and short-run drivers of real house prices in Nigeria from 1991Q1 to 2020Q4.

Design/methodology/approach

Vector autoregression and cointegration tests were used to assess the key drivers of Nigeria’s real house prices in the long run and short run.

Findings

The empirical findings revealed that household disposable income is the most important determinant of house prices in Nigeria. House prices increased by 1.6% and 60.8% in response to a 1% increase in disposable income in the long run and short run, respectively, while real mortgage credits pushed up house prices by 5% and have no long-run effects, suggesting that most Nigerians depend on their money income rather than credits in securing a home. In addition, prices of oil sector products and real interest rates had negative and significant relationship with house prices, while positive correlations were found for real effective exchange rate and real housing investments regardless of the time horizon. The impact of construction costs and cement prices was also documented.

Originality/value

This is likely a pioneering study of its kind to focus on the determinants of real house prices in Nigeria. It is probably the first study, the best of the author’s knowledge, to empirically examine the impact of the oil sector on house prices in the country.

Keywords

Citation

Okey, P.C. (2023), "Drivers of Nigeria’s real house prices: long-run analysis and short-run dynamics", International Journal of Housing Markets and Analysis, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHMA-07-2023-0093

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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