More households in Ghana were homeowners in the 2000 according to data sourced from Trading Economics – a global data provision centre.
There was a sharp decline of 10% after 10 years pushing the Home Ownership Rate in Ghana to a 47% in the year 2010.
According to Stats GH, an independent non-partisan, crowd-sourced verified data aggregation platform, in the same year thus, 2010, the percentage of renters rose from 22% to 31% during this timeframe.
The prospects of homeownership for this generation seem to be diminishing with the underlying factors listed below
The percentage of renters rose from 22% to 31% during this timeframe. The prospects of homeownership for this generation seem to be diminishing.
The percentage of renters rose from 22% to 31% during this timeframe. The prospects of homeownership for this generation seem to be diminishing.
Lack of Continuity Due to Consistent Change of Government
Ghana has suffered a lot of setbacks in provision of public housing due to lack of continuity from the part of government. The result has contributed to the housing situation facing the country at the moment. For instance, in seeking to boost housing supply, the Government of Ghana in the year 2005 pursued various programs such as the affordable housing program to build over 100,000 thousand units of housing through Private, Public Partnerships (PPP) across the country (Bank of Ghana, 2007). However, just after a change of government in the year 2009 all the projects have been abandoned and left to squatters up till now with no tangible reason given to complete them. This housing project when completed in any case could have accommodated hundreds of families (Ghanaweb, 2012).
Rural-Urban Migrations
Another major factor causing housing deficit in Ghana has been attributed to rural-urban drift. This according to Business World Ghana (2012) has increased the pressure on urban housing. Consequently, provision of housing has scarcely moved in tandem with demand, leading to pockets of slums and communities that seem to consist entirely of kiosks, containers and little by way of plumbing or drainage. Specifically, this can illustrate a situation of urban poverty especially in major cities and towns. For instance, in the year 2005, as a result of acute shortage of housing and poor conditions of housing, sub-Saharan Africa had 199 million slum dwellers constituting 20% of the world’s total slum population and had the highest urban growth rate of 4.58% and the high annual slum growth rate of 4.53%. However, Ghana in the same year had 5.4 million slum dwellers and is anticipated to reach 7.1 million by 2020. The worse hit cities are Accra, Kumasi and Sekondi-Takoradi as explained by UN-HABITAT (2006).
Population Growth and Urbanization
Ghana’s urban centers are at bursting streams from rural-urban drifts and bear the brunt of rapid urbanization. It is estimated that Ghana’s urban population will be about 52% of the national total growth and centered to this rapid urban growth are serious housing shortages and poor sanitation (UN-HABITAT, 2006). An increased in population growth and urbanization had made housing as one of the most serious problems presently faced by the government. The rapid population growth in the past few decades has been complemented by a relatively slow rate of increase in housing in many parts of the country. The rapid population growth in Ghana for instance is straining urban infrastructure, and degrading social amenities and shelter conditions, particularly in the Accra and Tema Metropolis (Modern Ghana, 2010).
Inadequate Mortgage Financing Institution
Apart from rapid population growth which is not met with increasing supply of housing, there is also a problem of mortgage financing. In well developed countries, the mortgage industry has proved to be the most capable and superior financier of the housing needs of the population (Bank of Ghana 2007). However, access to decent affordable house/home is the biggest challenge facing a greater proportion of the population in Ghana. This is due to the fact that, the Ghanaian economy is limited by fewer savings and borrowing than that of more developed countries. In addition, the demand for resources in all sectors of the economy also results in an under-funded housing finance system as described by Okonkwo (1997). Moreover, the problem of housing finance among the banks in Ghana is that most of them are portfolio lenders as pointed by Noah (2002). This means that the banks run a low-cost and low risk business where mortgage lending fits well in relation to other investment activities. In other instances, the banks have short- term funding and are unable to lend on a medium- or long term basis, the support of mortgage financing which takes about 25 to 30 years before full payment is made, is not common and all these problems have crippled the housing industry. Now it has become the biggest challenge facing a greater proportion of the population in Ghana to access decent affordable house/home (Noah, 2002).
High Cost of Land
Land is a fundamental resource to every country’s economic and social growth, since it is seen as an economic good
more than just a social good. In time past, a small amount of money was paid as allegiance of holding the land for economic or social activities. Nowadays, in urban property markets uncertainty over the ownership of land, long delays in approvals and the issue of titles, unscrupulous land sales, lack of compliance with planning requirements, delayed provision of infrastructure and other services, ill-disciplined land agents and corruption in all aspects of the industry have led to distortions and inefficiencies in urban land markets (CDD, 2000). Moreover, Dr. Tweneboah, the immediate past president of Ghana Real Estate Development Association also made this same assertion. He attributed the high percentage of vacant land available for development to behaviour of some traditional rulers who treat stool lands which by the constitution of Ghana are not saleable but only alienable by lease and consideration payable thereof is ground rent (Daily Graphic, 2012). The implication of this situation is that the cost of land to the purchasers is much higher than it should be. As a result, developers are only able to purchase few tracts of land for development and this affects the contribution of housing production.
Defective Land Tenure System
The cause of defective land tenure system in Ghana has been attributed to the traditional land administration system where ownership of land takes different forms; each with peculiar legal rights and incidents attached thereto (Ollenu, 1962; Appiah, 2007). Ownership is often unclear and the processes are bogged down by bureaucracy. As a result, it has become a major barrier to real estate developers to be able to obtain large tracts of land for real estate development. Moreover, the absence of efficient system of land ownership inventory has resulted in multiple sale of land creating an issue for real estate developers. This dispute has often led to unnecessary delays of projects as a result of legal suits (Appiah, 2007).
High Cost of Building Materials
The provision of infrastructure and affordable housing for the citizens is constrained by high cost of building materials (BRRI, 2012; Danso & Manu, 2013). Building materials account for 50 percent of the total cost of construction in Ghana (Asibuo, 1994). In addition, the high cost of building materials in Ghana is attributed by the over-dependence on imported raw materials for buildings for which local substitutes could be used if the necessary supports are given to the manufacturers (Yeboah, 2005).
Lack of Infrastructure and Provision of Utility Services
Infrastructural development is one of the components in the construction industry. The provisions of these infrastructures boost the development and attract potential investors to such areas. However, in many parts of Ghana such infrastructures and services are lacked. Therefore, the lag in infrastructure provision by Metropolitan and Municipal District Assemblies and service providers in newly developing areas have affected the production of housing (UN-Habitat, 2011). The developers estimated that infrastructure varies from 10 per cent to 30 per cent of the price of a dwelling, depending on the location of the site in relation to the existing infrastructure. However, developers end up bearing all these costs which affects the cost of production. This makes it impossible to provide houses which are affordable to the housing market.