The country is grappling with a housing supply deficit of 1.8 million units, a situation exacerbated by demand significantly outpacing supply. This challenge is likely to intensify due to ongoing increases in building material costs.
According to Patrick Ebo Bonful, President of the Ghana Real Estate Developers Association (GREDA), the situation is further complicated by a virtually nonexistent domestic home mortgage finance market.
He pointed out that home mortgage loans account for only 1% of Ghana’s Gross Domestic Product (GDP), which starkly contrasts with averages of 70% in the USA and 50% in the UK.
“The high cost of construction undermines the availability of adequate and affordable housing in the market.
The real estate sector relies on imported materials for over 70% of its building supplies, exposing it to the challenges of an unstable exchange rate that has plagued our nation for decades,” Mr. Bonful lamented.
He noted that, on average, a detached house currently costs between GH¢600,000 (approximately US$37,500) and GH¢900,000 (about US$56,250).
Speaking at the launch of Societe Generale Ghana’s ‘Home Sweet Loan’ mortgage product in Accra, Mr. Bonful highlighted several factors hampering the development of the home mortgage finance market.
These include a weak legal and regulatory framework, a lack of long-term funding options, rigid acquisition processes, and the low income levels of potential mortgage applicants.
Despite some promising growth in home mortgage financing in Ghana, significant challenges remain, particularly high interest rates on home loans that render them unaffordable for many prospective applicants.
Mr. Bonful emphasized the need for collaboration between the public and private sectors to create a conducive environment for a thriving mortgage market.
“It will require joint efforts from both public and private sectors, along with multilateral development institutions, to foster a robust home mortgage finance market in Ghana. Despite the challenges, the future of the sector looks promising,” he stated.
The launch of SG Ghana’s ‘Home Sweet Loan’ mortgage product is seen as a timely intervention that offers prospective homebuyers a flexible and affordable financing option.
Data from the Ghana Statistical Service (GSS) indicate that from 2000 to 2021, the housing stock in Ghana increased by 6.1 million units.
However, a concerning 90% of this increase was not financed through formal mortgage programs.
Additionally, GSS data reveal that the real estate sector grew by 5.1% in the first quarter of 2023, compared to a decline of 3.9% during the same period in 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.
