Ordinarily, if nothing else were happening, you would expect the following reactions for each economic aspect:
Exchange rate: market basket stability: the price should be stable relative to a market basket of currencies, so if your currency gets weaker, values in your local currency will be a high number to represent the same international value;
Interest rates: leveraged purchases and alternative investments—to the extent that local real estate is often a highly leveraged purchase, interest rates have a major impact on real estate prices.

People tend to judge the affordability of the monthly payment more than the actual price. As for the down payment, with high interest rates, I may be sensitive to the loss of income from taking the money out of an investment.

Stock markets: alternative investment or source of wealth; if stocks are up because of a general economic boom, it is normally bullish for real estate prices but could also siphon investment funds out of real estate into stocks.

But real life is more complex and nuanced. The reason for the change in the aspect could be a more prevailing influence. i.e., in a hot economy, interest rates can climb while real estate prices continue to climb because people can afford more and are more confident that they will afford even more in the near future and take on a debt they would ordinarily think excessive.

Typically changes in real estate prices mirror changes in local economic opportunity, but things like outside investors buying second homes can also bring values up, or previously unidentified hazards push values down

The post How Economic Forces Shape Housing Prices: The Impact of Exchange Rates, Interest Rates, and Inflation appeared first on Housing TV Africa.

Teriba’s comments come as President Bola Tinubu targets lowering inflation to 15 percent next year, a goal many analysts have called unrealistic amid rising food and fuel prices. Inflation surged to a 28-year high of 34.6 percent in November, putting pressure on the economy.

“With sufficient capital inflows and stronger foreign reserves, the exchange rate will stabilize, and inflation can drop to single digits,” Teriba stated. Citing Argentina as an example, he said inflationary pressures can be reversed if bold investment reforms are implemented.

Teriba called for immediate reforms to attract substantial FDI, which he argued could transform Nigeria’s struggling economy. While FDI inflows rose by 248 percent in Q3 2024 to $103.82 million, this remains insufficient to drive the growth needed for an economic turnaround.

“If the president can complement tax and finance reforms with an investment act to attract $50 billion in FDI within the next year, inflation will drop, and exchange rates will stabilize,” Teriba said.

However, Nigeria’s FDI has been on a decline, falling to a record low of $29.8 million in Q2 2024, down from $119 million in Q1. Teriba noted that existing policies, especially those focused on debt servicing, undermine the country’s ability to achieve economic stability.

Teriba criticized Nigeria’s heavy reliance on debt to fund fiscal deficits, describing it as unsustainable. He argued for equity-based financing as a more efficient alternative to borrowing at high interest rates, which he attributed to Nigeria’s poor credit rating.

“The interest rates Nigeria faces are among the highest globally. Borrowing under such conditions is inefficient and counterproductive,” he said. “We should prioritize equity over debt to create a sustainable economic structure.”

The economist also highlighted the inefficiency of Nigeria’s debt instruments, noting that comparable economies borrow at significantly lower rates by issuing higher-grade bonds.

Teriba urged the federal government to adopt a robust investment strategy that includes structural reforms and incentives to attract foreign capital. He warned that without such measures, inflationary pressures will persist, jeopardizing economic stability.

“If we remain on this trajectory of high-interest borrowing, we risk missing the opportunity to stabilize our economy,” he warned. “Bold reforms and significant FDI inflows can usher in an era of growth and stability for Nigeria.”

As Nigeria faces mounting economic challenges, Teriba’s recommendations highlight the critical need for decisive action to restore confidence and lay the groundwork for sustainable development.

The post $50bn FDI Key to Stabilizing Nigeria Inflation and Exchange Rates – Expert appeared first on Housing TV Africa.

The study highlights that the persistent rise in inflation and fluctuating exchange rates are major factors driving this trend, as more residents opt for renting over owning homes.

Economic Pressures Drive Demand for Rentals

The report noted, “Our analysis indicates that 98.5% of respondents in Lagos live in rented apartments.” It added that economic pressures, including high inflation and a volatile exchange rate, have led to a surge in property prices in Lagos, increasing the demand for rental properties.

READ ALSO: Lagos State to Launch Digital Platform for Monthly Rent Payments

“This demand is particularly strong in affordable areas that offer amenities and proximity to workplaces. The top three residential areas in high demand in Lagos are Yaba, Surulere, and Gbagada. Despite the increasing demand, the supply of housing in these areas remains insufficient to meet the growing needs.”

The housing deficit in Lagos State currently exceeds three million units, highlighting a significant gap between the demand for and supply of residential properties.

Homeownership Remains Elusive for Many

Babatunji Adegoke, Technical Secretary of the Nigerian Society of Engineers, Victoria Island Branch, commented on the cost of homeownership. “The cost of owning a home exceeds the average worker’s income. High mortgage interest rates are not appealing, and social housing options are rarely available and often unaffordable for the average income earner,” he stated.

He further explained that ongoing inflation has led many to prioritize meeting basic needs over homeownership.

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Residents Share Their Experiences

Justice Nwuchegbuo, a resident of Yaba, Lagos State, emphasized the challenges faced by many in transitioning from tenants to homeowners. “The high cost of land acquisition and construction, coupled with the rising cost of building materials, makes it challenging for people to build their own houses. As a result, the demand for rental apartments far exceeds the available supply, leading to a significant increase in rental costs,” he said.

Oluwatosin Babalola, a resident of Surulere, pointed out the attractiveness of Lagos as a major hub of commerce and finance, which draws many people seeking better opportunities. “The high cost of real estate in the state makes owning a property a daunting task for most residents. Renting is more affordable and frees tenants from additional expenses such as land use charges and other government fees,” she noted.

Challenges in the Rental Market

HousingTV reported that rents in Lagos have surged by 91.32% over the past five years, posing a significant challenge to residents seeking affordable housing. The shortage of available housing drives up prices, with even small apartments commanding high prices, ranging from 500,000 to over a million naira, depending on the location.

The post Rising Inflation and Exchange Rates Drive 98.5% of Lagos Residents to Rent appeared first on Housing TV Africa.