Subsidy removal and Nigeria's real estate industry: a micro-economic assessment of multiplier effects through mathematical modelling and poverty alleviation dynamics

Abstract

This study presents a microeconomic assessment of the impact of the May 2023 fuel subsidy removal on real estate affordability and housing access in Nigeria, utilizing cross-sectional data from 400 respondents across the six geopolitical zones. Employing Binary Logistic Regression complemented by a Keynesian multiplier framework, the research investigates the multiplier effects of subsidy removal on Nigeria's real estate affordability. The findings reveal that subsidy removal exerts a coefficient of −40.388 on household income, significantly undermining real estate affordability through two primary channels: the erosion of household income and the cost-push transmission of fuel price increases into construction costs, rents, and property prices (price change effect = −2.494, p = 0.017). Personal finance, with a coefficient of 2.953 (p = 0.008), emerges as the strongest positive determinant of real estate affordability, while the subsidy removal poverty effect (−3.879, p = 0.020) records the most significant compounding negative impact. Low-income earners particularly those earning ₦20,000 and below, who account for 52% of those most affected; middle-aged individuals between 41 and 55 years, and male-headed households, comprising 70% of those impacted, bear the greatest burden of subsidy-induced affordability shocks. These findings underscore the cascading nature of fuel subsidy removal on Nigeria's housing market and call for deliberate policy interventions, including social housing investment, rent stabilisation, and targeted income support programmes.

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