The State of Affordable Housing in Ghana

Ghana has a population of about 30 million. The country has seen rapid economic growth in recent years. There is a high demand for affordable housing in Ghana, but many people cannot afford to buy property. The high cost of materials and forex rates are some of the factors that make it difficult to provide affordable housing. The construction industry has not been able to keep up with demand to cater to the average Ghanaian and this has led to a lack of affordable housing options for middle-income earners and low-income earners.

 

Ghana’s property market is not doing too well, as prices are high and affordable housing is scarce. Forex rates are low and as such Ghana’s currency has been weakened. This has led to higher interest rates on mortgages, making them unaffordable for most Ghanaians.

 

In today’s property market, there is a notion of saturation with seemingly abundant options for property seekers to choose from. But on a closer examination, it is not so. The average cost of a 3 or 4-bedroom house in Ghana ranges between $100,000 and $200,000 (prices quoted in USD for indexing purposes). Many of the properties readily available are listed in price ranges that are quite above what the average middle class Ghanaian can “easily” afford; where “easily” means pulling all strings possible, including a applying for a mortgage.

 

A little bit on mortgages… Generally, the standard mortgages available in Ghana are not designed for your everyday man or woman who has a decent job pushing to make a good living with the standard of living quite high. With very high interest rates between 11% and 12% on USD (United States Dollars) denominated mortgages, and 21% to 22% on GHS (Ghana Cedis) denominated mortgages, many people are left scratching their heads if mortgages are worth it when considering home financing. Talk more of the loan qualification! Many people simply do not make the cut to even be considered eligible for a loan. From unstable jobs, to low wages, the factors for disqualification are many. Ghana has a mortgage financing system that is not very affordable for the average person. In order to qualify for a mortgage, you need to have a good credit history and provide proof of regular income.

 

The cost of building a house in Ghana is very high. There are many reasons for this. The most obvious reason is the cost of construction materials. The cost of building materials in Ghana is very high because they are imported, and imported goods are priced in US Dollars. In addition, there are no tax incentives for developers to build affordable housing, which means that the prices for building materials are not lowered as it would be if there were tax incentives.

 

The high cost of living in Ghana also makes it difficult for people to qualify for mortgages because they do not have the disposable income to pay off their loans. The high cost of land is another limiting factor. Most of the affordable lands are in the outskirts of the city and many people are not ready to relocate since the cost of transportation has also drastically risen due to increasing fuel prices.

 

The challenges persist and very little has changed towards realising the goal of affordable housing. The property market continues to be active regardless with more focus on high end projects. With some initiatives by the government (though yet to be felt by the real estate industry) to help provide more affordable housing (including reviving halted projects) and mortgage access to more Ghanaians, we hope for better days.