1.8m housing deficit remains a dark cloud

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By Sandra Agyeiwaa OTOO

The country faces a housing supply deficit of 1.8 million units, driven by demand far exceeding supply – with the situation set to worsen due to incessant rises in price of building materials.

The deficit, according to Patrick Ebo Bonful, President-Ghana Real Estate Developers Association (GREDA), is further driven by a near non-existent domestic home mortgage finance market.



For instance, he said, home mortgage loans constitute a mere 1 percent of gross domestic product. This compares rather unfavourably with an average of 70 percent in USA and 50 percent in UK.

“The high cost of construction also undermines delivery of adequate but affordable houses on the market. The real estate sector imports more than 70 percent of building materials – and this exposes the sector to vagaries of an unstable exchange rate regime that has bedevilled our dear nation for decades,” Mr. Bonful lamented.

He said, on average, a detached house costs between about GH¢600,000 (US$37,500) and GH¢900,000 (US$56,250) on the market today.

Mr. Bonful said this at the launch of Societe Generale Ghana’s (SG) ‘Home Sweet Loan’ mortgage product in Accra.

“The factors adversely affecting home mortgage finance market development are, among others, weak legal and regulatory framework; lack of long-term funds on the market, which also ultimately affects the tenor of home mortgage finance loans in Ghana; rigid home mortgage finance acquisition processes; as well as low income levels of prospective home mortgage finance applicants.”

He said despite the encouraging signs of growth for home mortgage financing in Ghana, there are still challenges that require urgent resolution. Key among them is high interest rates on home loans, which makes it impossible for the majority of prospective mortgage finance applicants.

This challenge, according to Mr. Bonful, necessitates joint efforts from the public and private sectors to create an enabling environment for a booming home mortgage finance market.

“It will take a collaborative effort by both the public and private sectors and multilateral development institutions to create the enabling environment for a thriving home mortgage finance market in Ghana. Notwithstanding these challenges, the future looks bright for the sector,” he said.

The launch of SG Ghana’s ‘Home Sweet Loan’ mortgage finance product, according to him, is a timely intervention offering prospective homebuyers a flexible and affordable financing option.

Data from Ghana Statistical Service (GSS) indicate that between 2000 and 2021 the Ghana housing stock increased by 6.1 million. The downside to this, however, is that 90 percent of this increase was not financed through a formal home mortgage finance programme.

Furthermore, GSS data indicate that the real estate sector grew 5. 1 percent in the first quarter of 2023, against a reduction  of 3.9 percent for the same period of 2022.

“We welcome SG Ghana’s initiative and look forward to collaborating more to address the challenges facing Ghana’s housing sector,” Mr. Bonful concluded.

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