Impact of Inflation on Property Value in Nigeria
Chapter One
Aim And Objectives
The aim of this study is to examine the impact of inflation on property values in Ilorin, Kwara State. To this end, the study shall focus on the following specific objectives;
- To identify the different types of properties in the study area 2. To identify the types and causes of inflation
- To examine the effects of the inflation on property values.
- To recommend probable solutions to the problem.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
This section is devoted to the review of literature on the impact of inflation on property value in Nigeria. It was done under the followings sub-headings:
The Effect of Inflation on Housing Prices
Housing prices tend to rise with inflation. Absent economic and supply-and-demand pressures, the price of goods remains the same. If the only change introduced to the economy is the addition of money, the price of goods will rise. Of course, the economy is dynamic – nothing ever stays the same. And there are a host of pressures starting and changing every day. But when the influence of other factors is small, more money moving around more quickly will increase the price of nearly everything, including housing prices. Gallagher (2018).
Housing As An Asset During Inflation
Housing is generally viewed as a good asset when it comes to inflation, in part because it will rise with the inflation rate and in part because it is a leveraged asset. Gallagher (2018).When you buy real estate, you make a down payment of perhaps 20 to 30 percent of the house price. The house price rises by the rate of inflation times the cost of the house, not by the cost of your down payment. So if inflation doubled the value of the house, it may have quadrupled the value of your down payment. If you took out a fixed-rate mortgage, you have done even better because you are making a payment that dropped in inflation-adjusted dollars. You are paying less for the loan than you did when you took it out.
Transportation and Property Value
Transportation is the conveyance of goods and people over land, across water, and through the air. It is also the movement of people and goods from one place to another by land (by road, rail, human porterage, motorized and non-motorized vehicles), across water (ship, canoe, boat, etc.) and through the air (helicopter, light and heavy aircraft, etc.). One thing is clear, transportation or transport involves the movement of people, goods and services from origin to destination either by road, air, sea, rail, human porterage, animals, pipeline and even telecommunication or combination of these modes to bring inter-modal essence of final movements of such goods, people or services (Wikipedia contributors, 2008).
The importance of transportation cannot be over-emphasized. Transportation centrally affects the relationship between physical space and society, and changes in transportation affect the organization of human activity in urban and regional space. It structures the built environment, spurs urban growth, as well as orders relationships among cities in a national urban system (Yago, 1983).
In a study on urban transportation issues in both India and North America, Singh (2005) stated that due to increases in population brought about by both natural increase and migration from rural areas and smaller towns, availability of motorized transport, increases in household income, and increases in commercial and industrial activities have added to transport demand. The expected effect on residential and commercial property markets was positive, but the range of impacts vary from marginal to over 100% in the commercial sector from the North American evidence.
In another study on UK, Singh (2005) found that the impact of road transport was positive particularly regarding capital increase in residential property values. However, the study put less emphasis on exact values, and some of the observed increase may be due to optimism of the markets rather than actual effects. Similarly, there is also some evidence that residential property prices might decrease immediately around the transport investment or station. Value increase was determined in the study in a narrow way and mainly through changes in property and land values whereas wider range of measures ought to have been used. The measures should have included changes in accessibility, ownership patterns for land and property, site consolidations, numbers of transactions and yields as well as composite measures such as density of development.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the methodology used in this study. It provides information on the procedures and methods used.
Research Design
The research design used is the survey design method. This comprises of oral interviews and questionnaire administration. The data collected was presented, analyzed and interpreted in chapter 4 by the use of tables.
Population of the Study
The population of the study consists of 350 people of Ilorin in Kwara State.
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
INTRODUCTION
This chapter dwells on the systematic analysis and arrangement of data collected. The data collected was through the use of questionnaire while the analysis was based on research questions stated earlier in chapter one of this study. Simple percentages and tables were used to analyze research questions. All data were coded using SPSS statistical package.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Introduction
This chapter presents the summary, conclusion and recommendations for further studies.
Summary
This study was carried out to examine the impact of inflation on property value in Nigeria. Ilorin in Kwara State as a study. To achieve this ultimate goal, the study revealed the following:
- a) The type of properties is in the study area.
- b) The types and causes of inflation.
- c) Inflation affects property values.
Conclusion
Based on the findings of this study, it is concluded that Inflation affects property values. However, in order to reduce inflation in Nigeria some issues should be put into consideration such as Devaluation of the Naira, the price of fuel, government economic policies etc because the policies of the federal government through the Central Bank of Nigeria (CBN) have contributed immensely to worsening inflation in Nigeria.
Recommendations
Based on the findings of this study, the researcher made the following recommendations:
- a) The people of Ilorin in Kwara State should be Productive because productivity is a major problem in Nigeria because of epileptic power supply which may increase cost of production. If industries reduce production due to any of these factors then supply decreases and prices will go up.
- b) The government should reduce the rate of Taxes because there has been a recent increase in taxation in Nigeria especially on imported goods. This discourages importation of goods and it discourages investors who may want to establish businesses in the country. This causes scarcity of goods and so leads to an increase in prices, thereby causing inflation. Taxes must be reduced to encourage investors to produce goods to increase supply so that inflation can be reduced in the market.
REFERENCES
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- Alonso, W. (1960): A Model of the Urban Land Market, Paper and Proceedings of the Regional Science Association, 6, 1960, 142-149.
- Alonso, W. (1964). Location and Land Use: Toward a General Theory of Land Rent. Cambridge, Massachusetts: Havard University Press.
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- American Public Transportation Association (APTA) (2002). Rail Transit and Property Values. Information Centre Briefing Number 1, (January, 2002). http//www.apta.com, accessed December 22, 2007.
- Ary, D., Jacobs, L., and Razavieh, A. (1996). Introduction to Research in Education. Fort Worth, TX: Harcourt Brace College Publishers.
- Business Insider: Here’s what faster inflation and rising mortgage rates mean for housing
