Characterising Real Estate Value as Co-determinant of Housing Choice Optimality in Nigeria

Abstract

Nigeria remains classified as a lower middle-income nation. Among middle-income households (MIHs), there exists an idea that real estate value is central to housing well-being, but the significance of the anecdote has not been empirically established.The principal aim of this study is to characterise real estate value (REV) as a co-determinant of optimality, the adopted proxy for housing well-being, through regression modelling of selected MIHs in Abuja and Minna, Nigeria. This study examined the impact of REV as well as the effects of four other pertinent variables (household income, commuting cost, workplace distance and household activity pattern) on housing choice optimality in Nigeria. Using primary and secondary data from purposively selected MIHs in Abuja and Minna, the study employed multiple regression to explore the relationships among the variables. The results show that the housing optimality model has a reasonable predictive explanation of approximately 57% - 77% for the explanatory variables. The study's findings also reveal that household income, real estate value and activity patterns have significant effects on housing choice optimality, albeit with varying magnitudes across the two cities. It is worth noting that the t-statistic ranges between -5.20(Abuja) and -2.12(Minna), thus implying that REV impacts optimality negatively and that REV is a burden which households must bear in order to secure the right to an apartment of their choices. The study concludes that given the real estate value, the consequential housing choice optimality could be predicted across different housing markets in Nigeria as a decision-support guide for rental seekers. Furthermore, given the consistency of these results with earlier studies, this work provides greater knowledge on the lifecycle of housing choices and realities in Nigeria. By adapting and extending the optimality idea to real estate, this study has made an important contribution to the discourse of optimal rental housing.