Effects of Macroeconomic Indicators on Cost of Building Materials in Nigeria

Abstract

A fallacy may exist regarding the availability of affordable houses due to rising inflation and the high cost of construction supplies brought on by the struggling economy. Because of this, most developing nations, including Nigeria, are dependent on the importation of building materials. This study looked into how certain macroeconomic parameters affected the cost of building supplies. The macroeconomic indicators are the interest rate, GDP, and inflation. The study's main finding is that the prices of building materials are not much impacted by these macroeconomic indices. Quarterly data over a period of ten years, from 2012 to 2021, were used in the study and were taken from public sources. The Nigerian Institute of Quantity Surveyors Quarterly Journal and the Guardian Newspaper provided the information on building materials. The Central Bank of Nigeria Statistical Bulletin was used to derive data on Gross Domestic Product, inflation, and the minimum rediscount rate. Multiple regression was the analytical approach utilized, and the findings indicated that the GDP, inflation, and interest rates all had a positive, substantial impact on the cost of building materials. This means that the price of building materials is influenced by key macroeconomic indices such as inflation, GDP, and interest rates. The report suggested lowering import taxes, waiving taxes for local manufacturers of building materials, and lowering bank loan interest rates, while Nigeria's government and central bank should develop policies to regulate and stabilize these macroeconomic indicators.