Eghosa Aiyamenkhue,
Email: aiyamenkhueeghosa@gmail.com
Department of Quantity Surveying, University of Lagos, Nigeria
Opeyemi Oyeyipo,
Department of Quantity Surveying, Bells University of Technology, Ota, Nigeria;
Oluseyi Akinbode Okeyode,
Department of Urban and Regional Planning, University of Ibadan, Nigeria
ABTRACT
Nigeria essentially imports a net amount of gasoline (PMS), diesel (AGO), kerosene (HHK), and aviation kerosene (ATK) (Osawe and Uwa, 2023) as cited by (David & Etakpobunor, 2024) .The need to subsidize the petrol pump price arise in order to maintain a reasonably fair standard of living while also making manufacturing, services, and living expenses affordable for all Nigerians. (Adeniran, 2016). This paper set out to accomplish the following objectives: firstly, to assess the impact of removing fuel subsidy on inflation, secondly to assess the results of removal of fuel subsidy on housing rent in Lagos and lastly to analyze the percentage housing rent increase in Lagos from June 2023 to June 2024. Secondary data are utilized in this study. With the help of this technique, the researcher was able to extensively analyze the recorded data. The study uses a desk review approach and gathers secondary data from the records of respectable institutions like the National Bureau of Statistics and Estate surveyor and valuer firm. The study utilized descriptive statistics to assess the results of removal of fuel subsidy on housing rent in Lagos. The finding revealed that within one year after fuel subsidy removal in May 2023 inflation rate has increased with 51% which had ripple effect on the price of product and services and that inflationary trend has been on systemic increase ever since subsidy removal was announced, inflation was 22.41% pre-subsidy removal since then it has had a month on month increase with June 2024 having the highest percentage rate of 34.40%. The result revealed that the houses in the low-income dweller area has the highest margin of increment which speaks to the fact that the low-middle income earners suffer more with the fuel subsidy removal which negatively impact on the inflation that jack up the price/rent for apartments in Lagos. The paper further finds out fuel subsidy removal impact on the percentage increment in market rent of housing within the low-income earner property area having as high as 100% increment in rent per annul compare with the high-income earner property rent having 67% increment, therefore revealing that the low-income earner paying more for rent as a result of subsidy removal as compare to the high earn earners. Hence, this defies the assertion that Housing represents 25% to 30% personal frequent budget of household income, because from the research findings, household in Lagos may have to spend as high as 50%-60% of their income on housing as a result of removing fuel subsidy.
Keywords: Fuel subsidy removal, Nigeria, Lagos, Housing rent, Inflation trend.
1.0 INTRODUCTION
Nigeria essentially imports a net amount of gasoline (PMS), diesel (AGO), kerosene (HHK), and aviation kerosene (ATK) (Osawe and Uwa, 2023) as cited by (David & Etakpobunor, 2024) .The need to subsidize the petrol pump price arise in order to maintain a reasonably fair standard of living while also making manufacturing, services, and living expenses affordable for all Nigerians (Adeniran, 2016). Fuel subsidy in Nigeria has largely been based on two arguments: providing a welfare package for the poor and accounting for an ample drain on the budget. In a country where 75% of the people live on between $1-$2 a day; subsidized Petroleum Motor Spirit (PMS) make key services inexpensive to the poor, thus providing affordable means of transportation and cushioning the effect of rising costs of products and services as a result of overall price increases of Petroleum Motor Spirit (PMS) (David & Etakpobunor, 2024). It is impossible to overstate the importance of fuel to the Nigerian economy as a production element for all economic sectors. A significant portion of Nigeria’s economy is dependent on petroleum motor spirit (PMS). to drive economic activities (Aligbe & Momoh, 2023). Fuel subsidies are government discounts on fuel market prices, allowing consumers to pay less than the prevailing market price. (Ovaga and Okechukwu, 2022). Also, It might be described as a government payment to a business or household meant to lower the cost of one or more factors, commodities, or services (Abdulhakeem, 2022). In 1972, the Nigerian government introduced an oil subsidy to mitigate the impact of rising global oil prices.(Dodo et al., 2024). The government provides subsidies by lowering the price of gasoline for consumers relative to the global price and making up the difference with funds from the government (McCulloch et al, 2020). The government believed that fuel subsidies were no longer practical given the nation’s current economic circumstances. This is because the government can no longer afford fuel subsidies due to the oil sector’s decline in fortunes; foreign exchange profits and revenues have dropped by 60%. In order to maintain spending, particularly on capital projects and salaries, the government had to liberalize PMS (premium motor spirit, also known as gasoline) prices (Oluwabukola, 2023).
According to Niyi and Aregbesola (2023) within 30 minutes of the liberalization of premium motor spirit (PMS), Not only did gasoline prices inevitably rise, but so did the cost of production, transportation, and food. Nigerians’ lives have changed in a number of ways as a result of the elimination of fuel subsidies. (Dodo et al., 2024). Although market-driven pricing and budgetary problems may be the goals, the affect of the decision on inflation, transportation costs, and people’s ability to support themselves cannot be undermined (Ogunode & Ukozor, 2022) as cited in (Dodo et al., 2024). However anticipated benefits of subsidy removal outlined by the President during his inaugural speech are yet to be realized by Nigerians. Instead, economic hardship has become increasingly prevalent in Nigeria (Audu et al., 2024). Aso, the macroeconomic effect studies, confirmed that fuel subsidies impact the economy via inflation, foreign exchange rates, external reserves, economic growth (Aniemeke, 2024). The average household relies on subsidized oil for domestic and commercial purposes, including mobility, transportation, and power generation due to the intermittent supply of public electricity to individuals and small-scale businesses (Manjo, 2023).
The fuel subsidies removal had a regressive effect on household income since households with lower incomes were more impacted than those with higher incomes by the rise in the cost of petroleum products. (Sodeeq, 2024). The people and economy have suffered as a result of removing fuel subsidies. The possibility of inflationary pressures stemming from the removal of subsidies is a major concern, as the price of necessities may rise. (Ikena & Oluka, 2023). It can lower a household’s purchasing power, especially for lower-income households (Sodeeq, 2024). removal of fuel subsidies led to increased living costs, exacerbated financial strain among households, intensified concerns about housing affordability, and posed broader economic challenges (Audu et al., 2024). Ayeyemi (2023). Asserted that according to specialists, the sudden removal of gasoline subsidies will cause building material prices to rise, which will therefore result in higher housing cost (Nwachukwu & Tumba, 2023). Reforms to fuel subsidies may have an indirect effect on Nigerian rental prices. Landlords and property owners may raise rent to cover the increased cost of transportation incurred as a result of rising fuel prices i.e. pass on the cost to the tenant. This may make it more difficult for people and companies to find inexpensive rental space, which could have an impact on occupancy rates and the demand for rental properties in general. ((Isong, 2023). This may result in Reduced profitability and even decisions about downsizing or relocation could come from this. As such, there may be a decrease in the market for residential property in certain areas, influencing housing rental prices and investment opportunities (Isong, 2023). Bond (2014) even observed that a Due to the exorbitant cost of living in Nigeria, a growing number of low-income tenants are moving out of the country’s urban centers and into the suburbs as housing rent and inflation continue to rise due to fuel subsidy removal. This, of course, should be expected as the prices of construction materials such as steel, cement and other building materials are increasing as a result of the removal of fuel subsidies. It’s quite frustrating only few people are able to handle the circumstances rising rent. What will become of the remaining individuals who are unable to pay the increasing rent? People become homeless as a result of this; an increasing number of people are sleeping on the streets because they are unable to pay even the minimum rent. ((NAN), 2024).
Despite these evidence in the literature, there is lack or insufficient discussion about the impact of the recent fuel removal on housing rent in Lagos as previous study had focused on other areas ((Adeniran, 2016), (Sodeeq, 2024), (Abdulhakeem, 2022), (Ozili & Obiora, 2023a), (Audu et al., 2024)). Moreso, previous studies did not assess the impact of fuel subsidy removal on housing rent in Lagos with regard post-subsidy removal. Against this backdrop, this paper aims to examine the impact of fuel subsidy removal on housing rent in Lagos. To achieve the aim, the study sets out to pursue the following research objective: (a) to assess the impact of removing fuel subsidy on inflation (b) to assess the results of removal of fuel subsidy on housing rent in Lagos and (c) the percentage house rent increase post subsidy removal. With the intention of offering insightful analyses of the dynamics of housing rent in the context of the elimination of fuel subsidies, since it is essential for stakeholders, economists, and policymakers to devise well-informed plans to advert the latent effects and maximize the potential advantages.
2.0 LITERATURE REVIEW
In Nigeria, increases in fuel pump prices have historically dovetailed with promises for economic reconstruction since the 1970s (Okogu, 1993). However, the sacrifices made hardly ever yield considerable benefits, this development has ruptured the social contract between the people and the government which has led to the former’s distrust for the latter’s institutions and programmes (Obasi et al., 2013). The real challenge the government faces is winning the trust of the people. Working Nigerians are hurting and their livelihoods are in danger with the doubling of petrol prices (Shagali & Yusuf, 2022).
Impact of fuel subsidy removal on inflation
The sudden rise in petrol costs brought on by the elimination of subsidies exacerbates the country’s citizens’ already dire financial situation. When subsidies are removed, poor consumer behavior can result in price instability, inflationary pressure, social unrest, and demonstrations. (Nwachukwu & Tumba, 2023). The elimination of fuel subsidies in Nigeria has several detrimental macroeconomic effects, such as slower economic development and higher inflation (Ozili & Obiora, 2023a). The fuel subsidy removal in Nigeria has precipitated a rise in inflation trend and a substantial deterioration in the economic welfare of the populace (Abdulyakeen & Mumuni 2024). The standard of living and fuel subsidies are closely correlated in Nigeria. Given the erratic electricity supply, the cost of gasoline is seen as a significant contributor to living expenses in Nigeria, it is utilized by small and medium-sized businesses as well as many homes. Thus, any increase in the price of fuel might have an instantaneous and direct impact on the cost of products and services throughout the nation. (Oyedele et al., 2023). Additionally, there is the psychological impact that it frequently has due to the strong sentiment associated with inexpensive and accessible gasoline. SME prices typically go up in response to rising fuel costs in order to offset the increased operating expenses, which may result in higher pricing for customers. People may find it more difficult to afford basic necessities as a result, which might lower their standard of living and increase poverty and inequality. (Oyedele et al., 2023). Hence, the conclusion that the elimination of petroleum subsidies has raised the price at the pump for fuel, which in turn has raised the cost of food, transportation, and other necessities. Low-income families and individuals are forced to make difficult financial decisions as a result, which lowers their standard of living. An increase in the price of petroleum has also increased inflationary pressures across the economy, driving up the cost of products and services. Those with fixed incomes are disproportionately affected by inflation, which makes poverty worse. Low-income people bear a disproportionate amount of the burden of rising living expenses and petrol pump prices, which widens the income gap and exacerbates economic inequality in the nation. (Yakubu & Mustapha, 2023).
Microeconomic impact of fuel subsidy removal
Nigeria’s PMS subsidy removal on 29 May 2023, after several attempts, had implications for the macroeconomy; As a result, the price of premium motor spirit increased nationwide, creating an inflationary trend. Removing gasoline subsidies also has some beneficial microeconomic effects, such as bringing in price mechanisms set by the market, reducing corruption related to fuel subsidy payments, boosting competitiveness, and reviving domestic refineries. Furthermore, the government can lower its borrowing and the resulting massive deficit by eliminating the subsidy, freeing up funds for other crucial areas. This will raise economic growth and raise residents’ standards of life. It will also lessen or remove the motivation for smuggling, which will lower the security dangers related to gasoline smuggling. (Oyedele et al., 2023). In addition to aforementioned, the withdrawal of gasoline subsidies has additional advantageous macroeconomic effects, such as helping to free up funds for the growth of other economic sectors and enabling the government to spend more on infrastructure, healthcare, and education. Fuel subsidy elimination may also encourage local refineries to generate more petroleum products, lessen Nigeria’s reliance on imported fuel, and create jobs. (Ozili & Obiora, 2023a). Furthermore It increased the amount of money collected for government spending, reduced international smuggling, and eliminated corruption that was present in the petroleum industry’s downstream sector. (Aniemeke, 2024).
On the other hand, the withdrawal of gasoline subsidies in Nigeria has detrimental microeconomic effects as well. These include an increase in social unrest, protest, poverty, fuel smuggling, crime, and the cost of petroleum goods rising, as well as job losses in the informal sector. (Ozili & Obiora, 2023b). The impact of the elimination of subsidies has highlighted the numerous hardship and economic challenges faced by the populace. It is clear that the lack of a deliberate approach and abrupt removal has resulted in economic, societal, and personal challenges (Sodeeq, 2024). Removing subsidies entirely could not be politically realistic, and the potential economic fallout could be greater than the anticipated gains from doing so, particularly in the short-term (Oyedele et al., 2023).
Fuel subsidy removal on housing
Golubchikov and Badyina (2012), assert that Housing is the fundamental social state that establishes the standard of living and well-being of individuals and communities. Un-Habitat 2008, One of the most fundamental human requirements is housing, which has a significant effect on a person’s welfare, social views, health, and economic output. According to Onibokun (1982) In addition to being a basic human necessity, housing is essential to human comfort, survival, and life sustenance. The provision of housing is a critical component of the personal frequent budget, accounting for 25% to 30% of household income and being essential to human subsistence. Audu et al., (2024) Revealed in their research that fuel subsidies removal led to increased living costs, exacerbated financial strain among households, intensified concerns about housing affordability, and posed broader economic challenges. The budget constraint assumption elucidates that the removal of the subsidy has imposed significant financial strain by necessitating a greater allocation of household income to cover increased fuel costs. The price of virtually everything has increased, including school fees, foodstuffs, house rent, and so on (Audu et al., 2024). Removal of fuel subsidies has substantially elevated living costs, exacerbated financial strain, intensified concerns regarding housing affordability, and presented economic challenges for households (Audu et al., 2024). According to a study on the effects of fuel subsidy removal on input costs of productions revealed that Production input costs have increased by 50.09% to 51.86% in industries such as forestry and logging, coal and lignite mining, chemicals, rubber goods, metal and other nonmetallic mineral products, food items, utilities, and property rental and leasing. (Harun et al., 2018). Ayeyemi (2023). Asserted that according to specialists, the sudden removal of fuel subsidies will result in a increase in the prices of construction materials and consequently lead to increased housing cost (Nwachukwu & Tumba, 2023).
According to a study on the effect of subsidy removal revealed that housing, water and electricity”; “transportation”; and “food and non-alcoholic beverages All three product categories together account for about 80% of the indirect welfare impact, it is anticipated that these three product categories would see the biggest price increases if fuel subsidies are removed.(Abdul-razak et al., 2014). Also, the study on the fuel subsidy rationalization: the perils of the middle class in Malaysia find out that each income group’s total household expenses are mostly made up of three categories: “food and non-alcoholic beverages”; “transport”; and “housing, water, electricity, gas, and other fuels.” However, the top class’s budget sharing pattern differs noticeably from that of the middle class and lower classes. According to the report, “housing, water, electricity, gas and other fuels,” “transport,” and “food and non-alcoholic beverages” receive the largest budget shares from the upper class. However, among the lower and middle classes, the largest budget portion went toward “food and non-alcoholic beverages,” which was followed by “housing, water, electricity, gas and other fuels,” and finally “transport.” In addition, it’s noteworthy to observe that the lower and middle classes spend far more of their budget on “food and non-alcoholic beverages” as well as “housing, water, electricity, gas, and other fuels” than does the top class. (Abdul-Hakim et al., 2014)”.
In fact, the issue has become complicated as price increase makes it more difficult for potential homeowners, particularly those in the middle- and lower-income levels, to afford homes. Certain areas that were formerly inexpensive for rent have become unaffordable for low-income tenants in major cities, including Lagos, Abuja, and Kaduna. due to the removal of fuel subsidy (Oriji & Anelechi, 2023). This situation has made the number of renters or tenants to swell without any restraints. With the increasing costs in every aspect of the economy as a result of the withdrawal of fuel subsidy there are indications that times are really hard for income earners. Bond (2014) even observed that both housing rent and inflation continue to rise, an increasing number of lowincome renters in Nigeria are moving from the country’s metropolitan centers to its suburbs, exacerbating the country’s growing cost of living due to fuel subsidy removal. This, of course, should be expected as the prices of construction materials such as steel, cement and other building materials are increasing as a result of the elimination of fuel subsidies. Due to this cost increase, real estate development projects are now more expensive. It is challenging for builders and developers to manage costs and profit margins, which has inevitably led to a delay in construction projects or an increase in home prices. An increase in building costs and living expenditures may lead to a rise in property prices. (Oriji & Anelechi, 2023).
RESEACH METHODOLOGY
Secondary data are utilized in this study. With the help of this technique, the researcher was able to extensively analyze the recorded data. The study uses a desk review approach and gathers secondary data from the records of respectable institutions like the National Bureau of Statistics and Estate surveyor and valuer firm. The study utilized descriptive statistics to assess the results of removal of fuel subsidy on housing rent in Lagos. Descriptive statistics were used to analyze the data. The specific kinds of data that were used for the study include the following: inflation rate and rent trend which are considered significant for the study.
FINDINGS AND DISCUSSIONS
THE IMPACT OF FUEL SUBSIDY REMOVAL ON NIGERIA’S INFLATION RATE
Table 1: NIGERIA’S RATE OF INFLATION FROM JANUARY 2023-JULY 2024
| YEAR 1 | INFLATION 1 | YEAR 2 | INFLATION2 | % INCREASE |
| 2023 January | 21.82 | 2024 January | 29.90 | 37.05 |
| 2023February | 21.91 | 2024February | 31.70 | 44.68 |
| 2023 March | 22.04 | 2024 March | 33.20 | 50.62 |
| 2023April | 22.22 | 2024 April | 33.69 | 51.63 |
| 2023 May | 22.41 | 2024 May | 33.95 | 51.49 |
| 2023 June | 22.79 | 2024 June | 34.19 | 50.03 |
| 2023 July | 24.08 | 2024 July | 33.40 | 38.69 |
| 2023 August | 25.80 | |||
| 2023 September | 26.72 | |||
| 2023 October | 27.33 | |||
| 2023 November | 28.20 |
SOURCE: NATIONAL BUREAU OF STATISTICS
Figure 1: INFLATION TREND IN NIGERIA
SOURCE: AUTHOR GENERATION FROM NATIONAL BUREAU OF STATISTICS Figure 2 INFLATON % INCREASE YEAR ON YEAR
INFLATION2 % INCREASE
|
SOURCE: AUTHOR GENERATION FROM TABLE 1
The result as shown in figure1; Table 1 shows the overview of inflationary trend since fuel subsidy removal; The data reveal that May 2023 inflation rate has remain the least of inflation rate of
22.41% since subsidy removal, June-Dec 2023 having the following upward inflation rate of 22.79%, 24.08%, 25.80%, 26.72%, 27.33%, 28.20%, Jan-May 2024 having the following inflation rate 29.90%, 31.70%, 33.20%, 33.69%, 34.19% and 33.95% respectively, revealing that within one year inflation rate increased with 51% which also had ripple effect on the price of product and services and lastly June-July had inflation rate of 34.19% and 33.40% respectively revealing that the month of July had the highest rate of 33.40%, therefore, it can be see that inflationary trend has be on systemic increase from May 2023 that subsidy removal was announced, inflation was 22.41% ever since it has had a month on month increase with June 2024 having the highest with a percentage of 34.40%. the inflation trend affirms the inflationary implications of gasoline subsidy withdrawal as asserted in the literature review of this work which is as follows; nationwide premium motor spirit price increases are creating an inflationary trend. (Aniemeke, 2024), The withdrawal of fuel subsidies in Nigeria has certain negative macroeconomic repercussions, including decreased economic growth and increased inflation. (Ozili & Obiora, 2023a). Fuel subsidy removal in Nigeria has precipitated a rise in inflation and a substantial deterioration in the economic welfare of the populace (Abdulyakeen and Mumuni (2024).
Table 2:THE RESULT OF FUEL SUBSIDY REMOVAL ON HOUSING RENT IN LAGOS
| PROPERTY RENT INCREASE RATE | ||||||
| PROPERTY S/N TYPE | PROPERTY LOCATION | 2023
RENT |
2024
RENT |
RENT
DIFERENCE |
PERCENTAGE INCREASE | |
| 1 | 3 BEDROOM
FLAT |
YANA IPAYA | 400,000 | 800,000 | 400,000 | 100 |
| 2 | 3 BEDROOM
FLAT |
IJU-ISHAGA | 700,000 | 900,000 | 200,000 | 29 |
| 3 | 4BEDROOM
DUPLEX |
IKEJA | 6,000,000 | 7,500,000 | 1,500,000 | 25 |
| 4 | 3 BEDROOM | IKEJA | 3,000,000 | 5,000,000 | 2,000,000 | 67 |
| 5 | 3 BEDROOM
TERRACE |
IKEJA | 3,000,000 | 3,750,000 | 750,000 | 25 |
| 6 | 3 BEDROOM
FLAT |
IKEJA | 2,500,000 | 3,000,000 | 500,000 | 20 |
| 7 | 3 BEDROOM
PENTHOUSE |
IKEJA-GRA | 6,000,000 | 6,500,000 | 500,000 | 8 |
| 8 | 3 BEDROOM
DUPLEX |
IKEJA-GRA | 7,000,000 | 8,500,000 | 1,500,000 | 21 |
| 10 | 2 BEDROOM
FLAT |
IKORODU | 650,000 | 800,000 | 150,000 | 23 |
| 11 | 3 BEDROOM
FLAT |
ISHERI
NORTH GRA |
1,000,000 | 1,350,000 | 350,000 | 35 |
| 12 | ROOMM &
PARLOUR |
KETU | 230,000 | 400,000 | 170,000 | 74 |
| 13 | ROOM SELFC0NTAIN | KETU | 140,000 | 250,000 | 110,000 | 79 |
| 14 | A ROOM | KETU | 60,000 | 100,000 | 40,000 | 67 |
| 15 | 3 BEDROOM
FLAT |
MERAN
IPAJA |
400,000 | 800,000 | 400,000 | 100 |
| 16 | 3 BEDROOM
FLAT |
OKOTA | 750,000 | 1,500,000 | 750,000 | 100 |
| 17 | 5BEDROOM
DUPLEX |
OMOLE PHASE 1 | 4,000,000 | 4,750,000 | 750,000 | 19 |
| 18 | 4BEDROOM
DUPLEX |
YABA | 4,000,000 | 5,500,000 | 1,500,000 | 38 |
SOURCE: ESTATE SURVEYOR & VALUER ARCHIVE
Table 2; is a representation of the housing rent in Lagos post removal of fuel subsidy; the result shows that a 3-bedrooms flat at Yana Ipaja and Meran Ipaja that was N400,000 has increase to N800,000 per annul, likewise same property type in Iju Ishaga has increased from N700,000 to N900,000 per annul, in the same vein a 3-bedrooms flat at Okota Ago palace that N750,000 has increased to N1,500,000. Also, a 3-bedrooms flat rent at Ikeja has increased from N3,000,000 to N5,000,000 and from N2,500,000 to N3,000,000 respectively, in same location a 3-bedrooms terrace rent has increased from N3,000,000 to 3,750,000. At Ikeja GRA a 3-bedroom penthouse rent, a 3-bedroom duplex and a 4-bedroom fully detached duplex rent has increased from N6,000,000 to N6,500,000, N7,000,000 to 8,500,000 and N12,000,000 to N25,0000 respectively the latter rent being that its along a commercial road. At Isheri North GRA; a 3-bedroom flat rent has increased from N1,000,000 to N1,350,000. A 5-bedroom duplex at Omole Phase 1 and a 4bedroom duplex at Yaba has increase from N4,000,000 to N4,750,000 and N4,000,000 to N5,500,000 respectively. A room, self-contain and a room and palour rent at Ketu increased from N60,000 to N100,000, N140,000 to N250,000 and N230 to N400,000 respectively and lastly the data revealed that a 2-bedroom flat rent at Ikorodu increased from N650,000 to N800,000. From the analysis It can be deduced that the houses in the low to meddle income areas (ketu, Okota, Ipaja, Iju Ishaga) has the highest margin of increment as compare to the houses in high income area (Ikeja, Ikeja-GRA, Omole Phase 1). This finding further affirm the finding Sodeeq, (2024). that fuel subsidies removal had a regressive effect on household income since households with lower incomes were more impacted than those with higher incomes by the rise in the cost of petroleum products. It is also important to notice that the budget portion of the lower and middle classes is relatively much larger than the upper class, not only in “Food and Non-Alcoholic Beverages” but also in “Housing, Water, Electricity, Gas and Other Fuels as a result of fuel subsidy removal (Abdul-Hakim et al., 2014)”.
Figure 3: % INCREASE IN HOUSING RENT IN LAGOS FROM JUNE 2023-JUNE,2024
SOURCE: AUTHOR GENERATION FROM ESTATE SURVEYOR & VALUER ARCHIVE
Figure3, present the percentage rent increase of the housing rent in Lagos; the data reveal that a 3-bedroom flat in Yana Ipaja and Okota rent increased by 100%, a room self-contain, a room and parlour and a room in Ketu rent increased by 79%, 74% and 67% respectively, 3-bedroom flat in Ikeja rent increased by 67% and 20% respectively depending on the location in Ikeja, 3-bedroom terrace and 4-bedroom duplex in Ikeja rent increased by 25% respectively, 3-bedroom duplex and a 3-penthouse rent increased by 21% and 8% respectively, 2-bedroom flat at Ikorodu rent increased by 23%, 3-bedroom flat at Isheri North rent increased by 35%, 4-bedroom duplex at Yaba rent increased by 38% and a 5-bedroom duplex at Omole phase 1 rent increased by 19%. The result revealed that the houses in the low-middle income dweller area has the highest margin of increase which speaks to the fact that the low-middle income earners suffer more with the removal of fuel subsidy which negatively impact on the inflation that jack up the price/rent for apartments in Lagos
The result supported the previous assertion in the literature of this work that fuel subsidy removal has an implication on the cost of housing and housing rent which that is fuel subsidies removal led to increased living costs, exacerbated financial strain among households, intensified concerns about housing affordability, and posed broader economic challenges (Audu et al., 2024), The price of virtually everything has increased, including school fees, foodstuffs, house rent, and so on (Audu et al., 2024).
CONCLUSION AND IMPLICATIONS
The finding revealed that within one year after fuel subsidy removal in May 2023, inflation rate has increased with 51% which had ripple effect on the price of product and services therefore, it can be see that inflationary trend has been on systemic increase from May 2023 that subsidy removal was announced, inflation was 22.41% ever since it has had a month on month increase with June 2024 having the highest with a percentage of 34.40%. Fuel subsidy removal has caused the housing rent in Lagos to skyrocket as revealed in the examination of the research data as a response to the inflationary trend with the highest increase margin in rental price borne more in the area where the low-medium income earner dwells
The removal of fuel subsidies in Nigeria, particularly in Lagos, has had profound repercussions on housing rent. The paper further highlights the impact of fuel subsidy removal on the percentage market rent of residential property with the low-income earner property area having as high as 100% increment in annual rent and the high-income earner property rent having 67% increment thereby revealing that the low-income earner paying more for rent as a result of subsidy removal as compare to the high earn earners. Also, this defies the assertion that Housing occupies a significant chunk of the personal frequent budget of just 25% to 30% of household income because from the research result household in Lagos might be spending as high as 50%-60% of their income on housing as a result of the fuel subsidy removal.
The paper made its contribution to literature regarding the impact of fuel subsidy removal in Nigeria on housing rent in Lagos. While other literature focused on fuel subsidy removal effect on macro-economic and on transportation, this study provided the fuel subsidy removal impact on housing rent gap in Lagos Nigeria.
The study recommend that government should prioritize long-term economic diversification, which includes investing in non-oil sectors to reduce the reliance on PMS and the vulnerability to price fluctuations in the same vein government should establish subsidies aimed at enhancing affordability and accessibility of affordable housing, thereby alleviating the burden of increased living housing cost, also government should develop through PPP affordable rent-to-own housing scheme to enable the low and moderate incomes earners who are mostly affected with the high housing rent have the opportunity to own their house so that even while they pay more in rent it becomes investment instead of an expense. In addition, government should Strengthen existing consumer protection laws to effectively safeguard consumers from exploitative rent review practice of landlords and their agents pricing practices so as to ensure fair rent. Government should through private public partnership to address issue of housing affordability and accessibility of housing, development of affordable housing schemes, rent control measures, and policies aimed at ensuring inexpensive home for those with low and moderate incomes in the society and the manufacturing sector should be incentivize especially the building materials manufacturer through tax break and low-interest rate loan to enable them produce materials at an affordable rate. Hence, it is essential to ensure continuous evaluation of the post-subsidy removal policy to enable identification of areas that need further improvement and the effectiveness of the post-subsidy policies in order to ensure that the populace wellbeing its of outmost priority. By implementing these recommendations, government agency and policymakers can work towards reducing the negative consequences of eliminating fuel subsidies on housing rent.
The study’s limitations are dependent on the fact that the research assessed the impact of fuel subsidy removal in Nigeria on housing rent in Lagos metropolis with few rental housing samples. Another study can be carried out covering other metropolis in the country with a wider sample size. In the same vein, the study assessed fuel subsidy removal impact on housing rent i.e. it is limited to the assessment of rental housing. Another study could be carried out to assess fuel subsidy removal in Nigeria impact on commercial property.
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