Identification of key macroeconomic variables for forecasting housing construction costs in Nigeria

Abstract

The housing sector in Nigeria has been undermined by the persistent rising costs of building construction. This study therefore determined the key macroeconomic factors influencing housing construction costs in Nigeria. Data obtained from quantity surveying firms and central bank of Nigeria (CBN), were analysed using one-sample T-test, Pearson correlation and Granger causality test. Findings reveal that fluctuations in costs of housing within the period were statistically significant. The results further indicate that GDP, money supply, exchange rate and inflation rate have significant positive relationship with housing construction costs. However, only inflation rate and gross domestic product (GDP) can be used to predict housing construction costs. The study recommends that government should initiate policies that will help in stabilising prices. It also recommends that caution should be applied when using historical cost data to predict the cost of housing during periods of rapid economic growth.