Income Status and Homeownership: Micro-econometric Evidence on Nigerian Households

Abstract

One of the core ambition of Federal Government staff of Nigeria is to own a home in urban areas. Generally, Income status plays a very significant role in the determination of home ownership in modern economies. Given the prominence of home ownership as a microeconomic success (utility) in Nigeria, Government and financial institutions in Nigeria has made considerable efforts to extend home ownership opportunities to low income earners through various channels. Based on the simplistic Linear Probability Model (LPM) of the Ordinary Least Squares procedure, the study elucidates information on 120 household income status and their chances of owning a house in urban Nigeria. Interviews, questionnaire and documents were used to collect data. As expected, Results revealed a positive and significant effect of salary on the probability of owning a home. These results suggest that ceteris paribus, at a very low income, a
household will not own a house, but at a sufficiently high level of annual income (salary), say at about N4,331,367 {dollar equivalents of $28,684.55}, it most likely will own a house. This clearly suggests that the chances of affording a house in the Urban Areas of Nigeria by a public
staff can be possible for highest grade level senior staff (salary), but probably unaffordable for the ordinary grade level senior staff in Nigeria. This paper thus suggests fiscal policies that will promote staff participation in mortgage scheme and increase staff salary to enhance housing affordability as a tool for public staff motivation.

Key words:Home ownership, income status, Simplistic Linear Probability Model, fiscal Policies