Analysis of the Effect of Inflation on Residential Property Investment Returns in Umuahia, Abia State, Nigeria

Obodoh Chikasi Mercy; Ajah Janefrancess Nneka; Nnamani Blessing Benedeth

doi:10.56201/ijgem.vol.12.no4.2026.pg316.330

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Analysis of the Effect of Inflation on Residential Property Investment Returns in Umuahia, Abia State, Nigeria

Obodoh Chikasi Mercy, Ajah Janefrancess Nneka and Nnamani Blessing Benedeth

Abstract

Umuahia, the administrative capital of Abia State, is attracting new housing investment as buyers seek relatively affordable plots and as state policies support private-sector estate development. Average asking prices for four-bedroom houses reached about ₦47 million in early 2025, up from roughly ₦35 million two years earlier. At the same time, the cost of key building inputs such as cement and steel rose by more than 30 per cent between mid-2023 and mid-2024, largely because of exchange-rate weakness and energy-price shocks. Developers have passed much of this cost pressure to buyers and tenants. This study investigates the influence of inflation on residential real estate returns in Umuahia, Abia State, Nigeria. The research aimed to determine how inflation affect investment returns in the residential property market between 2019 and 2024. Data were collected using questionnaires and interviews administered to property investors, tenants, and estate managers. Mixed method involving both qualitative and quantitative techniques were employed to analyze the relationship between inflation and property returns. Findings revealed that inflation significantly reduces the real returns from investment (X2 cal 14.62) and discourages new investment in residential properties. The study also found that although nominal rental values increased, high inflation rates caused persistent declines in real returns. Additionally, most investors experienced difficulty adjusting rents due to tenants’ limited purchasing power, leading to reduced net gains. The study recommends that property investors should monitor economic indicators closely, diversify property portfolios, and adopt cost-effective management practices to sustain returns during inflationary periods. Policymakers and urban planners should stabilize construction material prices, encourage affordable housing programs, and implement economic reforms that promote a stable investment environment within the real estate sector. Key words; Inflation, Residential Property, Investment Retuns, Nominal Returns, Real Returns.

Keywords

; InflationResidential PropertyInvestment RetunsNominal ReturnsReal Returns.

References

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Analysis of the Effect of Inflation on Residential Property Investment Returns in Umuahia, Abia State, Nigeria

Abstract

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References

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