Effects of Interest Rate on Housing Prices in Lagos Metropolis
[1]
Olanipekun T. Alaba, Internal Quality Assurance (IQA) Unit, Yaba College of Technology, Yaba, Nigeria.
[2]
O. J. Adegoke, Department of Estate Management, Obafemi Awolowo University, Ile-Ife, Nigeria.
This paper examined the relationship that exists between lending interest rates and housing prices using Lagos metropolis as a case study. The paper employed both primary and secondary sources of data collection. The secondary source of data collection was used to gather information on lending interest rate for a period of fifteen (15) years. Information were extracted from Central Intelligent Agency (CIA) world fact book while questionnaire was used as primary method of data collection from registered Estate Surveying Firm (ESF) located in Lagos state. The formula developed by the Research Division of the National Education Association of the Minnesota and Texas University, United State of America (S=X2 NP (-P) +d5 (N-1) +X2P (1-P)) and cited by Ojo (2005) was adopted in order to determine the sample size. Thus, One Hundred and sixty five (165) firms were sampled but 50 percent questionnaires were returned. The simple random sampling technique was used to select the simple size and descriptive and inferential statistics were used to analysis data collected. There was a progressive reduction in the percentage increase of housing prices from a low class of housing type to a high class of housing type. Although the general price level of housing price was on the increasing side. However, between a period of 15 fifteen years there is a decrease in lending interest rate by 4.27%. The trend of lending interest rate was on the down slide. Factually all the factors under consideration affect housing prices in the study area. However the impact of Location is of great importance. There exist a significant correlation between the housing price (two bedroom flats, three bedroom flats, semi detached houses and detached Houses) and the lending interest rate. These correlations were fairly strong negative relationship. The paper recommended that the state government should re-strategizes in there development pattern so as to bring about a health competition in different part of the state. The financial institution should further reduce the lending interest rate especially to those involved in real estate sector and effort should be gear toward monitoring such loan. The paper concluded that it is evidence that there exist a significant relationship between the housing price of all types and the lending interest rate.
Interest Rate, Lending Interest Rate and Housing Prices
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