By Wisdom JONNY-NUEKPE
With the Bank of Ghana (BoG) anticipating a modest GDP growth coupled with a tight labour market, gradual slowdown in inflation and predictions of lending rate cuts later in the year, the Ghana Real Estate Developers Association (GREDA) is optimistic the cuts could spark AN upsurge in housing demand.
The association maintains in its Real Estate Market Watch document for 2024 that cuts in interest rates will probably be a key catalyst of home demand increase – barring any intricate and unforeseen influences that would cause upward price pressure on properties.
“Once interest rates decline further, it’ll feed into improved homebuyer demand; and once the demand for home-buying starts to rise, there’ll likely be increased housing activity – which is expected to happen in late 2024,” GREDA president Patrick Bonful indicated.
As the central bank’s policy rate moved from 30 percent to 29 percent in January this year, GREDA posits a continuous drop will make mortgages affordable.
Conversely, Mr. Bonful explained that an unexpected rise in interest rates this year – amid the country’s desire to build the economy and reduce inflation – could make housing expensive, dampen demand and put pressure on prices.
“Our expectation is that the market will have continued growth in house and unit prices this year, barring any further economic hitches,” he noted.
Real sector’s performance
Despite the economic downturn, according to GREDA the sector grew by 1.2 percent in second quarter-2023 from 1.0 percent in the same year’s first quarter.
This, the association indicates, is a sign of rejuvenation in the country’s capital value appreciation for real estate transactions.
Indeed, the Ghana Statistical Service has said, on a year-on-year basis, the sector saw growth of 4.2 percent in the second quarter of 2023 compared to the -5.7 percent recorded over the same period of the previous year.
However, there is a mixed outlook for the capital value of real estate in 2024 – with the market expected to rise, but at a slower pace than in recent years.
GREDA said several factors – including unforeseen hikes in interest rates, economic uncertainty and increased supply – could weigh on prices.
Ghana’s real estate market, which comprises residential and commercial real estate, is projected to reach US$459billion this year, with residential real estate dominating with a projected value of US$389billion in 2024.
These estimates exclude real estate agencies, construction companies, accommodation services, commercial real estate leases and government buildings.
