Project – The Effects of Rising Housing Costs on Household Consumption Patterns and Financial Resilience. A Study of Low- and middle-income households in Alimosho LGA, Lagos State.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Housing is one of the most important components of household welfare because it provides shelter, security, privacy and a foundation for family and economic activities. However, housing is not merely a physical structure; it is also a major expenditure commitment that influences how households allocate their available income among other essential needs. For households that rent their accommodation, increases in rent and related housing expenses can reduce the amount of money available for food, transportation, healthcare, education, clothing and savings. Housing affordability therefore involves more than the ability to obtain accommodation; it also concerns whether households can meet housing obligations while maintaining an acceptable standard of living. Stone (2006) explains that housing affordability should be assessed in relation to the income remaining after housing costs have been paid, rather than by considering housing expenditure in isolation. This perspective is particularly important for low- and middle-income households because a substantial increase in housing costs may require significant adjustments to their everyday consumption patterns. Consequently, understanding rising housing costs is essential for examining household welfare and financial stability.

The relationship between housing costs and household consumption is important because households generally operate within limited financial resources and must make choices among competing needs. When rent, mortgage payments, maintenance charges and other accommodation-related expenses increase faster than disposable income, households may reduce spending on non-housing goods and services to meet their housing obligations. Such adjustments may include purchasing less expensive food, reducing healthcare expenditure, postponing educational expenses, limiting transportation options, delaying the replacement of household items and cutting back on recreation. Angsta et al. (2025), in their study of rent-burdened households in Los Angeles, examine how renters respond to housing unaffordability and the adjustments they make to their household budgets. Although their study was conducted outside Nigeria, it illustrates the relevance of examining the practical consequences of housing costs beyond the housing market itself. Similarly, the National Bureau of Statistics (2019), through its report on consumption expenditure patterns in Nigeria, demonstrates the importance of examining the distribution of household expenditure across food and non-food categories. These considerations establish a basis for investigating whether rising housing costs influence the consumption priorities of households in Alimosho Local Government Area (LGA), Lagos State.

Housing affordability has become an important concern in rapidly urbanising societies, where population growth, demand for accommodation, land constraints, construction expenses and infrastructure limitations can place pressure on housing supply. In metropolitan areas, households may face difficult choices between living close to employment and commercial centres and seeking cheaper accommodation farther away. Such choices may create additional transportation expenses, longer commuting times and other costs that reduce the financial benefit of moving to less expensive housing. In Lagos, the affordability challenge has been examined in relation to the factors that restrict the provision of suitable housing for different income groups. Ogundipe et al. (2024) identify several barriers affecting affordable housing provision in metropolitan Lagos, including land-related constraints, policy implementation challenges and the cost of housing development. Their findings provide relevant context for examining the pressures that can affect the housing options available to residents. When affordable accommodation is limited, households may be compelled to accept housing that consumes a large share of their income or relocate to areas where the direct cost of accommodation is lower but other living expenses may be higher. The combined effects of these decisions make housing costs an important factor in household consumption and financial well-being.

In Nigeria, household consumption is influenced by income levels, employment conditions, household size, prices of essential goods and the availability of financial resources. The National Bureau of Statistics (2019), in its Consumption Expenditure Pattern in Nigeria 2019 report, documents the distribution of household spending between food and non-food items and highlights the importance of understanding how households allocate their expenditure. The Nigeria Living Standards Survey 2018/2019 also collected information on household income, food and non-food expenditure, housing conditions, assets, credit and exposure to economic shocks, demonstrating the interconnected nature of household living conditions and financial circumstances (National Bureau of Statistics [NBS] & World Bank, 2020). These categories are relevant to a study of rising housing costs because an increase in rent can change the proportion of income available for other forms of consumption. Households may respond by reducing discretionary purchases, relying on cheaper substitutes, borrowing money or drawing down savings. The nature and extent of these responses may differ according to income, employment security, household size and existing financial commitments. Examining these relationships at the household level can help explain how housing expenditure influences living standards under different economic circumstances.

The concept of financial resilience is equally important in understanding the consequences of rising housing costs. Financial resilience refers to the capacity of individuals or households to withstand financial shocks, meet unexpected expenses, maintain essential consumption and recover from periods of economic difficulty without experiencing severe or prolonged financial distress. A financially resilient household may have savings, reliable income, manageable debt, access to affordable credit or support from family and social networks. In contrast, a household that spends most of its income on rent and other essential expenses may have limited capacity to respond to emergencies such as illness, job loss, business failure or sudden increases in food and transportation costs. The World Bank (2022), in its assessment of poverty in Nigeria, identifies economic vulnerability and exposure to shocks as important concerns for household welfare and poverty reduction. The Nigeria Living Standards Survey further recognises the importance of studying household assets, credit, consumption and economic shocks when assessing living conditions (NBS & World Bank, 2020). From this perspective, rising housing costs may weaken financial resilience by reducing savings, increasing dependence on borrowing and limiting the ability of households to manage unexpected financial demands.

Alimosho LGA provides a relevant setting for investigating these issues because it forms part of the wider Lagos metropolitan area, where residents participate in diverse employment, trading, service and informal economic activities and face varying housing and household expenditure commitments. Low- and middle-income households may have different levels of financial flexibility, depending on their employment arrangements, income regularity, number of dependants and access to savings or other financial support. For a household with relatively stable earnings, an increase in rent may require a reduction in discretionary expenditure without immediately affecting essential consumption. For a household with irregular earnings, however, the same increase may create difficulties in purchasing food, paying school-related expenses, accessing healthcare or meeting utility bills. Research on housing affordability in Lagos has highlighted the constraints faced by households seeking accommodation that is financially sustainable relative to their income (Ogundipe et al., 2024). However, evidence concerning housing affordability at the metropolitan level does not automatically explain the precise consumption adjustments and financial coping strategies of low- and middle-income households within a particular local government area. It is therefore useful to examine the experiences of households in Alimosho, taking account of their housing expenditure, income circumstances, consumption decisions and ability to manage financial pressures.

Against this background, the present study investigates the effects of rising housing costs on household consumption patterns and financial resilience among low- and middle-income households in Alimosho LGA, Lagos State. It focuses on how housing-related expenses influence the allocation of household income to food, healthcare, education, transportation, utilities, savings and other consumption needs. It also examines the financial adjustments households may make when housing costs increase, including reducing expenditure, using savings, borrowing, delaying payments or seeking additional sources of income. The study is relevant because household welfare cannot be assessed solely by whether a family has access to accommodation; it must also consider whether that family can afford housing without sacrificing other essential needs or becoming increasingly vulnerable to financial shocks. The National Bureau of Statistics and World Bank’s household living-standards framework provides a useful basis for considering consumption, housing, assets, credit and shocks together (NBS & World Bank, 2020). By focusing on low- and middle-income households in Alimosho, the study seeks to generate local evidence that can contribute to a clearer understanding of housing-cost pressures, household spending decisions and financial resilience.

1.2 Statement of the Problem

Rising housing costs constitute a potential financial burden for households whose incomes do not increase at a similar rate. Housing expenses such as rent, accommodation-related charges, maintenance and utilities compete with other essential household needs for limited financial resources. When housing expenditure absorbs an increasing share of disposable income, households may have less money available for food, healthcare, education, transportation and savings. Although housing affordability is widely discussed in relation to access to accommodation, its implications for the broader household budget require equal attention. Stone (2006) argues that affordability should be considered in terms of the resources remaining after housing costs are met, while Angsta et al. (2025) examine how rent burdens affect household-level spending decisions. The problem, therefore, is not simply whether households can secure accommodation, but whether they can continue to meet other essential needs after paying for it. For low- and middle-income households in Alimosho LGA, the extent to which rising housing costs influence these competing expenditure commitments requires systematic investigation.

A related problem concerns the changes that households may make to their consumption patterns when housing expenses increase. Households facing higher rent may reduce the quantity or quality of food they purchase, postpone medical treatment, limit educational spending, reduce transportation choices or delay replacing essential household items. Some may also depend on informal borrowing, support from relatives or additional income-generating activities to cover recurring expenses. These adjustments may not be immediately visible through housing expenditure figures alone, yet they can affect household welfare and the quality of life of family members. The National Bureau of Statistics (2019) shows the importance of analysing the distribution of household expenditure across food and non-food categories, while the Nigeria Living Standards Survey provides a framework for examining consumption, housing conditions and household economic circumstances together (NBS & World Bank, 2020). Nevertheless, the specific consumption adjustments made by low- and middle-income households in Alimosho in response to rising housing costs cannot be assumed without local evidence. It is therefore necessary to investigate the expenditure categories most affected and the ways households prioritise competing needs.

The effect of rising housing costs on financial resilience presents another concern. Households with limited disposable income may find it difficult to save regularly or maintain emergency funds when a growing proportion of their earnings is committed to accommodation. Reduced savings can leave them more exposed to unexpected events such as illness, job loss, business interruption, school-related expenses or further increases in the prices of essential goods. Some households may respond by taking loans, accumulating arrears, selling assets or relying on family support. Although such strategies may provide temporary relief, they may also create additional financial obligations or weaken the household’s ability to cope with future shocks. The World Bank (2022) highlights the importance of vulnerability and exposure to economic shocks in understanding poverty in Nigeria, while the Nigeria Living Standards Survey includes household assets, credit and economic shocks among its areas of investigation (NBS & World Bank, 2020). The problem is that the relationship between housing-cost pressures and the ability of low- and middle-income households in Alimosho to maintain savings, manage debt and meet unexpected expenses needs to be examined rather than presumed.

Furthermore, existing research on housing affordability in metropolitan Lagos has identified constraints affecting the provision of affordable accommodation, but broader findings do not necessarily establish how housing-cost increases affect household consumption and financial resilience within Alimosho LGA. Ogundipe et al. (2024) examine barriers to affordable housing provision in metropolitan Lagos, while research on housing affordability in Nigeria’s urban markets identifies income, household size and housing-related costs among factors associated with the ability to afford homeownership (Determinants of Homeownership Affordability in Nigeria’s Urban Housing Markets, 2015). These studies provide useful background, but the present research is concerned with the connected household-level outcomes of housing costs, consumption decisions and financial coping capacity among low- and middle-income residents of a defined local government area. Without such local evidence, it may be difficult to determine which consumption categories face the greatest pressure, how households differ in their coping strategies and whether housing-cost burdens are associated with reduced financial resilience. This study therefore seeks to address this problem by examining the effects of rising housing costs on household consumption patterns and financial resilience among low- and middle-income households in Alimosho LGA, Lagos State.

1.3 Aim and Objectives of the Study

The aim of this study is to examine the effects of rising housing costs on household consumption patterns and financial resilience among low- and middle-income households in Alimosho LGA, Lagos State.

The specific objectives are to:

1. Examine the extent to which rising housing costs affect the allocation of household income among low- and middle-income households in Alimosho LGA, Lagos State.
2. Determine the effects of rising housing costs on household consumption patterns, particularly expenditure on food, healthcare, education, transportation and other essential needs.
3. Assess the relationship between rising housing costs and the financial resilience of low- and middle-income households in Alimosho LGA.
4. Identify the financial coping strategies adopted by low- and middle-income households in Alimosho LGA in response to rising housing costs.

1.4 Research Questions

The study will be guided by the following research questions:

1. To what extent do rising housing costs affect the allocation of household income among low- and middle-income households in Alimosho LGA, Lagos State?
2. What effects do rising housing costs have on household consumption patterns, particularly expenditure on food, healthcare, education, transportation and other essential needs?
3. What relationship exists between rising housing costs and the financial resilience of low- and middle-income households in Alimosho LGA?
4. What financial coping strategies do low- and middle-income households in Alimosho LGA adopt in response to rising housing costs?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: Rising housing costs have no statistically significant relationship with the financial resilience of low- and middle-income households in Alimosho LGA, Lagos State.

1.6 Significance of the Study

The findings of this study are expected to be useful to several groups, including households, government agencies, housing policymakers, financial institutions, researchers and community organisations.

Households: The study may help households understand how housing expenses influence the allocation of income and the ability to meet essential needs. By identifying common expenditure adjustments and coping strategies, the findings may encourage more informed household budgeting, savings decisions and financial planning.

Government and housing policymakers: The findings may provide useful evidence for government agencies responsible for housing, urban planning, social welfare and economic development. Understanding the relationship between housing costs, consumption and financial resilience may support the design of housing and welfare interventions that consider not only access to accommodation but also the capacity of households to maintain an acceptable standard of living.

Housing providers and property managers: The study may offer insights into the financial circumstances of low- and middle-income tenants and the implications of housing-cost pressures for household welfare. This information may encourage greater consideration of affordability, rent-payment arrangements and the economic circumstances of tenants in housing-related decisions.

Financial institutions and community organisations: The study may help financial institutions and community-based organisations understand the financial vulnerabilities experienced by households with high housing commitments. Such knowledge may inform the development of suitable savings programmes, financial education initiatives and responsible support mechanisms for households facing economic pressure.

Researchers and students: The study may contribute to the literature on housing affordability, household consumption and financial resilience in Nigeria. It may also serve as a reference for future studies examining housing expenditure and household welfare in other local government areas or urban communities.

1.7 Scope of the Study

The geographical scope of the study is Alimosho Local Government Area, Lagos State, Nigeria. The study will focus on low- and middle-income households residing within the study area. Its subject scope covers rising housing costs, household consumption patterns, financial resilience and the coping strategies adopted in response to housing-related financial pressures.

Housing costs will include rent or other regular accommodation payments and relevant housing-related expenses, depending on the household’s tenure arrangement and the operational measures adopted for the study. Household consumption patterns will cover expenditure on food, healthcare, education, transportation, utilities and other essential or discretionary needs. Financial resilience will be assessed in terms of the capacity to maintain savings, meet unexpected expenses, manage financial obligations and withstand economic shocks.

The study will use information obtained from the selected respondents to examine these issues within the period covered by the research. Its findings will primarily relate to the participating low- and middle-income households in Alimosho and should not automatically be generalised to every household in Lagos State or Nigeria.

1.8 Limitations of the Study

The study may encounter some limitations. First, respondents may be reluctant to disclose accurate information about their income, rent, debts, savings and other financial commitments because these matters are personal. To reduce this limitation, respondents will be informed of the academic purpose of the study and the confidential treatment of their responses.

Second, household income and expenditure may fluctuate because of irregular employment, business activities, seasonal income and changing prices. Information collected at a particular point in time may not fully represent the household’s financial situation over a longer period. The study will therefore interpret reported expenditure and financial experiences within the period covered by the data collection.

Third, differences in household size, employment status, housing tenure and number of dependants may influence the way housing costs affect consumption. The study will consider relevant household characteristics in its data collection and analysis where possible.

Finally, the study is limited geographically to Alimosho LGA and may not capture the full range of housing conditions across Lagos State. Despite these limitations, careful questionnaire design, appropriate sampling procedures and transparent analysis will help improve the quality and usefulness of the findings.

1.9 Operational Definition of Terms

Rising Housing Costs: Increases in the amount households pay for rent or other accommodation-related expenses, including relevant maintenance and housing charges, over a specified period.

Household Consumption Patterns: The way a household distributes its available income among food, healthcare, education, transportation, utilities, clothing, savings and other goods and services.

Financial Resilience: The capacity of a household to meet regular financial obligations, withstand unexpected expenses, maintain essential consumption and recover from financial shocks without prolonged hardship.

Low-Income Households: Households with relatively limited income and restricted capacity to meet housing and other essential living expenses. For the purpose of the study, their classification will follow the income criteria established in the research instrument and methodology.

Middle-Income Households: Households with income above the study’s low-income category but whose resources may still be constrained by housing expenses and other regular financial commitments. Their classification will be defined operationally before data collection.

Housing Affordability: The extent to which a household can meet housing expenses while retaining sufficient resources for other essential living costs.

Disposable Household Income: The income available to a household for consumption, saving and other financial commitments after applicable deductions.

Financial Coping Strategies: The actions households take to manage housing-cost increases, such as reducing expenditure, using savings, borrowing, seeking additional income or receiving assistance from family members.

Alimosho Local Government Area: The local government area in Lagos State that constitutes the geographical setting of this study.

1.10 Organisation of the Study

The study will be organised into five chapters. Chapter One presents the introduction, background to the study, statement of the problem, aim and objectives, research questions, research hypothesis, significance, scope, limitations and operational definitions of terms.

Chapter Two will review relevant conceptual, theoretical and empirical literature on housing costs, household consumption patterns, financial resilience and coping strategies. It will also identify the research gap and present the conceptual framework guiding the study.

Chapter Three will explain the research methodology, including the research design, study population, sample size and sampling technique, research instrument, validity and reliability procedures, method of data collection and techniques for data analysis.

Chapter Four will present and analyse the data collected from respondents and discuss the findings in relation to the research questions, hypothesis and reviewed literature.

Chapter Five will provide the summary of findings, conclusion and recommendations based on the results of the study. It will also identify areas for further research.

Project – The Effects of Rising Housing Costs on Household Consumption Patterns and Financial Resilience. A Study of Low- and middle-income households in Alimosho LGA, Lagos State.