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Current challenges propelling the housing deficit in Ghana

Residential and commercial developments dominate the property market. The residential market is the most active, registering an estimated 85,000 transactions per annum over the past decade, according to Ghana Investment Promotion Company (GIPC). Commercial property is the second-largest segment in the market and includes office accommodation and retail space.

The industrial segment is significantly smaller than the commercial market, while recreational and civic or cultural property development is virtually non-existent.

Despite the spike in the sector, experts predict that the housing deficit in Ghana is more than one million homes. And to address this deficit, there is a need to deliver approximately 150,000 housing units per annum for the next 20 years. According to Samuel Amegayibor, the Executive Secretary of the Ghana Real Estates Developers Association (GREDA), the total housing shortage in the country reached 5.7 million units in 2020. And more than 50% of Ghana’s population live in substandard houses.

Data from Statista shows that about 7.1 million people presently live in slums.

The government of Ghana has done so much work in curbing the issue. One example is the Saglemi Affordable Housing Project introduced by President John Mahama’s administration. Sadly the project was stalled “over allegations that the country was short-changed with the provision of 1,500 housing Units as against the projected 5000-housing units.”

President Akuffo-Addo’s government has also tried to intervene with the National Housing Mortgage Fund (NHMF) projects. Through the NHMF partnering with GCB Securities, the government set up the Affordable Housing Real Estate Investment Trust (REIT) to provide rental homes for public sector workers. The scheme is based on a rent-to-own model where public sector workers can access decent and affordable homes for between 15 to 20 years and pay a residual value to own the property. Lower interest rates (11.9 to 12.5 percent) are offered as part of the scheme, compared with the nominal minimum rate of 24 percent for non-foreign currency or cedi-denominated mortgages.

By and large, the gap between intentions and achievements is still considerably wide.

Ghana currently has a housing deficit of 2 million units. And to address this deficit, there is a need to deliver a minimum of 170,000 housing units per annum for the next 20 years.

Add to that, the Minister of Works and Housing, Mr. Francis Asenso-Boakye, believes that 60 percent of Ghana’s population would need some form of government assistance to get access to housing. In comparison, 35 percent would not access housing even with government support in terms of subsidy.

In this section, we analyze the various factors causing the housing deficit in Ghana.

Rural-Urban Migration

Rural-urban migration is one of the leading causes of the housing deficit in Ghana. According to industry analysis, migration and rapid urbanization have increased the pressure on urban housing as 56.71 percent of Ghana’s total population now live in urban areas and cities. That number was 43.9% in 2000, and it isn’t showing any sign of going down. Consequently, the provision of housing has scarcely moved in tandem with demand. You can easily see the effects of that drastic shortage in the growing number of slums and fragile settlements in cities such as Accra, Kumasi, and Sekondi-Takoradi.

Non-Commitment to Successive Government Housing Projects

Ghana has enjoyed a considerably peaceful democracy. The 2020 Global Peace Index report ranks Ghana as the most peaceful country in West Africa and third in Africa.

However, when it comes to affordable housing provision, the consistent change of government seems to contribute to the housing deficits in Ghana. Why? Industry analysts believe that governments’ inability to continue projects from their predecessors hampers progress. Here’s a case in point: The Government of Ghana in 2005 pursued various housing programs such as the Affordable Housing Project. The project aimed to build over 100,000 units through Private, Public Partnerships (PPP) across the country. However, just after a government transition in 2009, all the projects were abandoned and left to squatters with no concrete plan to complete them.

High Cost of Land & Land Acquisition Challenges

You can only build a house if you can afford the land. Lands are essential resources to every country’s economic and social growth. It’s a form of economic good, not just a social good.

In Ghana, customary authorities (i.e., stools, skins, clans, and families) own most land. Together they own about 78% of all lands, the State owns 20%, and the remaining 2% is owned by the state and customary authorities in the form of partnership (split ownership) (Larbi, 2008).

Research shows that there’s been a tremendous increase in the price of land in Ghana, as land is becoming increasingly scarce, in part due to the said issue of rapid urbanization and demographic growth. These pressures have increased competition for land between different groups, such as multiple land users, urban elites, and foreign investors(Cotula, Toulmin & Hesse, 2004).

A survey by Oduro-Kwarteng (2007) indicates the land market in Ghana is being characterized by problems and constraints such as general indiscipline, which have led to land conflicts, litigations, and other adverse effects, particularly on the environment. The research attributes the indiscipline in the land market to the misconduct of land sellers (i.e., Traditional Authorities, family heads, Government agencies on vested lands) and buyers (Estate Developers and Agents) as well as those who play the role of referees to regulate the market (surveyors, planners, lawyers, Land Commission officials, Survey Department, Town & Country Planning Department, Metropolitan/Municipal and District Assemblies, Environmental Protection Agencies, Land Economists).

So here are the challenges facing Ghanaians when acquiring lands:

  1. Uncertainty over the legal ownership of land
  2. Ungodly delays in approvals and issues of original land documents
  3. Corrupt land sales
  4. Non-conformity with city planning requirements
  5. Late provision of infrastructure and other services
  6. Rogue land agents leading to corruption, distortions, and process inefficiencies

To address these, the government began working on plans to digitize the land registry in 2018.