EFFECT OF MACROECONOMIC VARIABLES ON PROPERTY DEVELOPMENT IN LAGOS, NIGERIA (2000-2017)

Abstract

Macroeconomic variables are very important for real estate development, just like every other types of investment. More so, real estate sector has become a focal point of government fiscal and monetary policies and is being used as yardstick for realizing low level inflation, high level of employment, low level of unemployment and balanced economic growth in an operational economy. As a result, the continued changes in the economic environment with fiscal and monetary policies with their attendant multiplier effects on other sectors of the economy have become a source of concerns for investors in decision making. This research therefore assesses macroeconomic variables with a view to determining their association/effect on property development in Lagos, Nigeria. Primary and secondary data were adopted in the analysis of the study. Secondary data were sourced from the database of the Lagos State Property Development Corporation while the selected macroeconomic variables data of (Gross Domestic Product (GDP), Interest Rate (INTR), Exchange Rate (EXR), Inflation rate (INF), Unemployment Rate (UNEMP) and Money Supply (MS)) were obtained from Central Bank of Nigeria (CBN) statistical bulletins of various years and Nigerian Bureau of Statistics (NBS) data portal Quarterly time series data was used from 2000Q1 – 2017Q4. The collected data was then analyzed using statistical tools that include descriptive analysis, trend analysis, granger causality and multiple regression analysis. Findings revealed a stable equilibrium relationship between macroeconomic variables and property development in the long run, hence it was recommended that with proper examination of the overall macroeconomic activity, any property investor can use the changes in the economic indicator for predicting the movements of the market and hence formulate their strategies in accordance with those changes in the long run.