…Skyrocketing property prices in Accra shutting out average Ghanaians!
Can’t buy property in Accra? You’re Not Alone.
The soaring prices of real estate properties in Accra have made it increasingly difficult for the average Ghanaian to become a homeowner. The city’s real estate market has been experiencing a sharp increase in demand due to the country’s economic growth and population boom, leading to a corresponding surge in property prices. This has made it difficult for many Ghanaians to purchase landed properties, with many being priced out of the market.
In general comparison, housing in Texas is more affordable than in Accra. According to Zillow, the average home value in Texas is around $350,000, while in Accra, home prices can range from $100,000 to $1,000,000 depending on the location and type of property. This means that housing in Accra is generally more expensive than in Texas USA.
The issue of rising property prices in prime areas of Accra, Ghana.
In recent years, the city of Accra, the capital of Ghana, has experienced rapid urbanization and economic growth, with many international investors and businesses looking to invest in the country. This growth has led to a surge in demand for real estate in prime areas of the city, including Cantonments, Labone, East Legon, Ridge, Airport Residential Area, et al. As a result, the cost of housing in these areas has skyrocketed, making it increasingly difficult for average Ghanaians to afford homes in these neighborhoods.
The rapid pace of urbanization in Accra has led to an increase in demand for housing in prime areas of the city. As more people move to the city, the demand for real estate in these areas continues to grow, putting upward pressure on prices. Centralized business centers, good roads and key amenities, such as schools and hospitals, located in prime areas, further increase demand for properties in these areas.
Accra is a densely populated city, and the availability of land in prime areas is limited. As a result, developers and property owners can charge a premium for properties in these areas, driving up prices. The growing demand from high-net-worth individuals and expatriates is also driving up property prices in prime areas of Accra. Many wealthy Ghanaians and expatriates are looking for high-end properties in prime areas that offer luxurious amenities and convenient access to the city’s key business and cultural centers. Marketing of these properties in prime areas is always tied to how close these locations are to Kotoka International Airport. Therefore demand from this demographic is further driving up prices in these areas.
Lastly, there is a certain clout and class associated with prime areas in Accra. Properties in these areas are often seen as a status symbol, and owning a property in a prime area can confer prestige and social status. This creates additional demand for properties in these areas and can drive up prices even further. Currently, real estate developers only have to name a new area ‘hills’ of an old prime area to drive class and sales. Example, East Legon Hills which is not close to East Legon, Airport Hills around East Airport, Kwabenya Hills close to Brekuso, Adenta Hills looking towards Akropong.
So, what next? Cantonments Hills at Teshie? Labone Hills at Kpone? and Ridge Hills at Ashongman?
In essence, these factors, along with others, have contributed to the rising cost of real estate in prime areas of Accra, making it difficult for average Ghanaians to afford homes in these neighborhoods.
However, from a property builder or seller’s point of view, there is the major issue of the high cost of building materials as well as import duties, levies, and tax burdens in Ghana.
Under the current tax regime, real estate developers pay approximately 40 percent duty, VAT and other taxes plus levies on building materials when they are imported into Ghana.
For example, where those materials cost about $100,000, they pay $40,000 to clear them, $5,000 in shipping and logistics charges, and an additional $4,000 in bank transfer charges and additional local financing costs, if they borrow to purchase these building materials. That means that the exact same materials we would use in Texas for $90,000 end up costing $170,000 in Ghana. Unfortunately, all this burden will now have to be transferred to the home buyer.
Consequences of rising real estate/property prices in Prime Accra
There is a risk of increasing social and developmental inequality in the country. With this unequal distribution of development and infrastructure, wealthier areas tend to receive more investment in infrastructure and development, leaving less affluent areas behind. This can create a cycle of poverty and exclusion that is difficult to break, leading to further social and economic inequality. For one, rising property prices make it increasingly difficult for average Ghanaians to afford homes in these neighborhoods. This has the potential to widen the wealth gap in the country, as only the wealthy are able to afford properties in prime areas.
High property prices also have an impact on businesses operating in prime areas. Higher rental costs can make it difficult for small and medium-sized businesses to operate profitably, potentially leading to a concentration of wealth and power among larger corporations that can afford to operate in these areas.
Furthermore, rising real estate prices have a negative impact on the overall economy. When the cost of real estate becomes too high, it can deter investors from entering the market and limit economic growth. This can have a ripple effect on other industries and sectors of the economy, leading to a slowdown in economic activity and potential job losses.
There is also a potential property bubble and market instability. A housing bubble is characterized by rising property values that are driven by demand, speculation, and exuberance. When real estate prices rise too quickly, they can create a speculative bubble that may burst, leading to a sudden drop in prices and causing financial instability. This can have severe consequences for the wider economy and may take years to recover from.
Finally, the average Ghanaian will be locked out of home or property ownership in his or her home country.
Possible solutions to curb rising property prices in prime Accra
One possible solution to curb rising real estate prices in prime Accra is to decentralize business centers and improve infrastructure in non-prime areas. This would help to redistribute economic growth and development across the Greater Accra Region.
Government can provide incentives to businesses and developers to invest in other areas, such as tax breaks, infrastructure improvements, or other incentives. This can help to create new economic centers and provide new opportunities for development in non-prime areas.
Another solution is to improve public transportation. Safe and accessible public transportation, such as trains, buses, and city taxis, can help to reduce demand for properties in prime areas and encourage development in other areas. Governments can invest in safe and efficient public transportation systems to make it easier for people to travel to other areas of the city. The possible key to unlock this solution is the development of property road network and rail services. Strategically placed railway lines and services will improve the public transport system and this is must be treated as a priority project. If a train moves from Aburi to Accra, Nsawam to Accra Central or Tema to Makola frequently in the morning and evening and takes approximately 35 minutes for each journey, then there will be no reason for the influx in prime Accra. This is evident in many developed nations like the UK, USA, Canada among others. In London for example, the rail and bus system is so efficient that majority of workers who work in central London commute by train and bus and don’t even have to own a car. Improving dual or tri-carriage roads with limited traffic and efficient traffic management systems can help reduce congestion and make it easier for people to travel to other areas of the city.
Finally and most importantly, the affordable housing development initiatives by not only the government but also developers can also help to curb rising real estate prices in prime Accra. Governments can also provide tax incentives, subsidies, or other programs to encourage developers to build more affordable housing in areas with close proximity to these prime areas.
Encouraging foreign investment in non-prime areas can also help to redistribute economic growth and development across the city. Governments can provide incentives to foreign investors to invest in non-prime areas, such as tax breaks, infrastructure improvements, or other incentives. This can help to create new economic centers and provide new opportunities for development in non-prime areas.
The Role of GREDA
The Ghana Real Estate Developers Association (GREDA) plays a vital role in regulating and overseeing the real estate market in Accra. GREDA is a private sector organization that represents real estate developers and related professionals in Ghana. GREDA works to promote and develop the real estate industry in Ghana through advocacy, research, and training.
The ultimate goal of GREDA is to ensure that all Ghanaians have access to the housing of their choice and the opportunity to realize the dream of home ownership. It plays a key role in advocating for policies and regulations that promote sustainable development and affordable housing. For example, GREDA has called for the government to provide tax incentives and subsidies for developers who build affordable housing, and it has advocated for stronger regulations to prevent property bubbles and market instability.
Overall, GREDA plays a vital role in promoting and regulating the real estate industry in Accra. Its efforts to promote transparency and professionalism, advocate for sustainable development and affordable housing, and prevent market instability are essential to ensuring that the real estate market remains stable and accessible to average Ghanaians.
However, it can always do better in price regulations. In order for real estate businesses in Ghana to not be seen as a money laundering scheme, GREDA must adopt price control mechanisms to control the pricing of properties in Accra and Ghana as a whole.
To end, the consequences of rising real estate prices are concerning, including the potential for property bubbles and market instability, as well as unequal distribution of development and infrastructure. However, there are also potential solutions to curb rising real estate prices in prime Accra, such as decentralizing business centers and improving infrastructure in non-prime areas, promoting safe and accessible public transportation, developing affordable housing, encouraging foreign investment in non-prime areas, and stronger regulation and oversight by real estate market regulators such as GREDA.
KOJO TABIRI IS A LAWYER AND A MEMBER OF ZOE, AKYEA & CO LAW FIRM IN LABONE, ACCRA WHOSE LEGAL INTEREST INCLUDES PROPERTY (REAL) LAW AND CONSTRUCTION LAW. HE IS ALSO A MEMBER OF THE GHANA BAR ASSOCIATION AND THE AFRICA BAR ASSOCIATION (CONTACT: [email protected])
EDDY ACQUAH IS AN INTERNATIONAL PROPERTY CONSULTANT AND MEMBER OF THE GHANA ASSOCIATION OF REAL ESTATE BROKERS (GAREB) AND GHANA REAL ESTATE PROFESSIONALS’ ASSOCIATION (GREPA). (CONTACT: [email protected])
