Effect of Macroeconomic Factors on Residential Property in Abuja, Nigeria.

Year 2017, Volume: 8 Issue: 2, 133 - 149, 25.12.2017

M. B. Wahab A. S. Adeogun G. B. Morenikeji M. Mammah S. O. Abdulkareem

Abstract

Abstract: Performance of property market is a measure
of total returns, and the totality of returns within the country property
market is influenced by the state of the economy. The backward and forward
relationship between property market and the economy has influenced a rise and
fall in future of property returns in Abuja market. The study utilized both
primary (returns) and secondary data (macro-economic variables), and the
time-series data on annual macroeconomic indices and total returns index
spanning between 2001-2015 were employed for the study. The result of Augmented
Dicker Fuller (ADF) test showed that all the variables were stationary after
first and second differencing order.  The
result of cointegration test further suggests the existence of long run
relationship between macroeconomic factors and residential property returns.
The result of further cointegration regression suggests that between
18.2%-83.6% and 16.2%-79% variation in 3B/R and 4B/R property returns
respectively across the seven out of twelve residential markets were
significantly influenced by macroeconomic indicators. The study concludes that
positive economic policies are meant to improve the property market, vice
versa. The study therefore recommends that policy-maker should painstakingly
study the future implication of any macroeconomic policy as such could
adversely affect the property market, and this could also conversely affect the
contribution of real estate sector to the national economy development,
vise-versa.

 

Keywords: Property returns, macroeconomic
factors, cointegration regression analysis. 

Keywords

property

References

• Abraham J. and Hendershott P. (1996), “Bubbles in Metropolitan Housing Markets”, Journal of Housing Research, 7(2): 191-207.
• Apergis N. (2003), “Housing Price and Macroeconomic Factor: Prospect within the European Monetary Union”, International Real Estate Review, 6(1): 63-74.
• Belo M. and Abgatekwe A. (2002), “Project Management in Property Development: the Nigeria experience”, Ibadan: University Press PLC.
• Born W. and Pyhrr S. (1994), “Real Estate Valuation: The Effect of Market and Property Cycles”, Journal of Real Estate Research, 4(3): 455-485.
• Brook and Tsolacos (2001), “Linkages between Property Return and Interest Rate. Evidence for the UK”, Journal of Applied Economics, 33(6): 711-719.