CHAPTER THREE: CONTEXT OF THE STUDY
3.0 Introduction
The concept of Housing has always been an integral part of all human societal existence. Housing irrespective of the form of sheltering or nature of living space plays an integral part in the welfare of every living thing, and it is for this reason that we turn our focus on the hu+man society with regards to housing. In light of this basic human need, this chapter aims at analysing some of the numerous policies that have been adopted in Ghana in order to address housing challenges in the country, whiles taking into consideration the effectiveness of these interventions towards the provision of affordable housing to the citizen over a period of time.
After this overview, the contributions of other industry stakeholders, particularly those developers operating in the private sector will be examined to determine as to what extent their output in the housing sector helps reduce the large housing deficit faced by the country. Further to this, this study will aim at providing a general conclusion based upon the observations carried out with regards to the influence of modern contemporary housing trends on architecture and physical facilities in Ghana.
THE COUNTRY GHANA
Ghana is a constitutional republic with two spheres of government – national and local. The country has a unicameral parliament (National Government Portal, 2020). The Head of State and government is the executive president. Its local government as well as decentralisation are set out in the constitution with its main legislation being the Local Government Act 1993 (Act 462). The country is divided into sixteen administrative regions with each region having a regional minister appointed by the president.
The highest levels of local government have three types of assemblies: district, municipal and metropolitan. District assemblies combine towns and rural areas with populations of 75,000 or more. Municipal assemblies are single-town councils with populations of 95,000 or more and metropolitan assemblies cover urban areas with populations of over 250,000. Sub-structures that do not hold legislative powers undertake activities assigned to them by the assemblies. The sub-structures are sub-metropolitan, district, urban, town, zonal and area councils and unit committees.
Every district assembly is expected to present an annual budget estimate and development plan to the general assembly for approval. For the purpose of financing development activities, assemblies are authorised to raise internal revenue; however, they must wait for the national government to approve its estimates of contributions to projects before any transfers are made. All approved budgets of district assemblies and development plans are combined by the Regional Coordination Council (RCC) and submitted the National Development Planning Commission (NDPC) for approval. After approval is received from the NDPC, the RCC then submits the budgets for development plans to the Ministry of Finance for approval.
It is the responsibility of district assemblies to set and collect local revenue. The national government transfers various grants to the local government. The chief one being the District Assemblies’ Common Fund (DACF) under which no less than 10% of Gross Domestic Product (GDP) must be transferred to and distributed by the assemblies annually. Urban grants and the District Development Facility (DDF) are other grants that are given to district assemblies. These are however performance-based.
The national government dictates main policies. The assemblies are responsible for implementing and enforcing them. These responsibilities include public health, provision of environmental protection, sanitation, planning and basic education. Social welfare is however a shared responsibility.
Greater Accra Region
The region is divided into 12 local government districts – the Accra Metropolitan Assembly and 11municipal districts. The Accra Metropolitan District is the only district in the capital with a city status. POPULATION?? STATS???
2019
District Name Population
Accra Metropolis 2,052,341
Ada East 88,321
Ada West 72,880
Adenta Municipal 96,478
Ashaiman Municipal 235,465
Ga Central Municipal 144,521
Ga East Municipal 182,183
Ga South Municipal 507,192
Ga West Municipal 270,989
Kpone Katamanso 135,438
La Dadekotopon Municipal 226,148
La Nkwantanang Madina Municipal 137,975
Ledzokuku Krowor Municipal 280,924
Ningo Prampram 87,393
Shai Osudoku 64,000
Tema Metropolis 360,828
TOTAL 4,943,075
Source: (Ghana Statistical Services, 2020)
GROSS DOMESTIC PRODUCT
In 2017, Ghana’s Gross Domestic Product (GDP) was recorded at 8.1%. In 2018 the country saw a fall in its GDP with a recorded growth rate of 6.3%. In terms of performance, the Industry sector recorded highest growth rate of 10.6%, the Agriculture Sector recorded the second highest growth rate of 4.8% whiles the Services Sector recorded the third highest growth rate with 2.7%. The real estate industry falls under the Service Sector, however despite the Service Sector’s increased growth rate, the sector recorded a decline in its gross value-added growth rate from 3.3% in 2017 to 2.7% in 2018. Previous years saw the Ghanaian economy GDP grow by 7.9% in 2010, 17.4% in 2011, 9% in 2012, 7.9% in 2013, 2.9% in 2014 and by 2.2% in 2015 (Ghana Statistical Services, 2020). Figure XXXX and XXXX below depict these growth rates.
Figure XXXXX: Gross Value-Added Growth Rate by Sector (%)
Source: Ghana Statistical Services (2020)
Figure XXXXX: Growth Rates of GDP by Sector
Source: Ghana Statistical Services (2020)
In 2019, the first quarter saw its GDP grow by 6.7% an improvement compared to the 5.4% recorded in the first quarter of 2018. Once again, the Industry Sector recorded the highest growth of with 8.4%, the Service Sector recorded the second highest growth of 7.2% and the Agriculture Sector recorded the third highest growth rate with 2.2%. The Real Estate Industry saw a growth of 9.1% which was a significant growth compared to the 2.7% in 2018 (Ghana Statistical Services, 2020).
Table XXXX: Quarterly Real GDP Growth From 2017 to First Quarter 2019
Source: Ghana Statistical Services (2020)
The Ministry of Finance forecasted a total GDP growth rate of 7.6% for the year 2019. The International Monetary Fund (IMF) also forecasted an estimated overall GDP growth of 8.8% and anticipated Ghana’s economy to be the fastest growing economy in 2019. The predicted growth was well above the anticipated growth for Sub-Saharan Africa and the global economy which were 3.5% and 3.3% respectively. Oil, gas, gold and cocao production were identified as the main areas to drive the economy’s growth backed by government reforms including privatisation, price deregulation and trade liberalisation (International Monetary Fund, 2019).
The 2019 budget deficit target was 4.2% of GDP for 2019 compared to the 2018 budget deficit target was 3.8% of GDP. Gross debt for 2018 was 60% of GDP and 62% of GDP for 2019(IMF,2019). In March 2019, the government raised $3 billion in Eurobonds. In April 2019, the country quitted a four-year International Monetary Fund credit program. The country remains poor despite these improvements.
The Banking Sector and Exchange Rates
The banking sector in Ghana has seen a significant increase in deposits mainly due to reforms in the financial sector. The first half of 2019 recorded a total deposit of GHC75.5 billion compared to the total deposit of GHC68.3 recorded for the year 2018. The banking sector recorded growth in the industry’s total assets of GHC109.9 billion within the first four months representing 12.4% annual growth. Profit-after-tax in the fist quarter was also significantly high. In May 2019, the Regulator restructured the financial sector with emphasis on microcredit and microfinance institutions. As a result, an estimated 39 insolvent microcredit and 347 microfinance institutions were shut down by the government. About 10 microcredit and 155 microfinance institutions had already ceased operations due to the restructuring of the sector (Broll, 2019).
Cedi Depreciation
The Ghanaian Cedi (GHȻ) has been losing value against major currencies for the past ten years. Data from Bank of Ghana (BoG) indicates that the Cedi depreciated by 17.5% in 2012; 14.6% in 2013; 31.3% in 2014; 15.6% in 2015; 7.9% in 2016; and 4.9% in 2017.In 2019 the cedi recorded a cumulative depreciation of 9.3% against the United States Dollar (USD)in the first nine months with an average monthly exchange rate of GHȻ5.435 = US$1. Over the past ten year, the Ghana cedi has lost about 80% of its value against the United States dollar. Likewise, in September 2019 the Ghana cedi depreciated by 6.1% against the euro and 6.9% against the British pound (Bank of Ghana, 2019).
Figure XXXX: Exchange Rate 2010 to 2020 (US$/GHȻ)
Source: (Trade Economics, 2020)
In February and March 2019, the Cedi declined vastly against major international currencies especially the United States dollar (US$). The US$1 to GH₵4.87 and GH₵5.36 recorded at December 2018 and March 2019 respectively showcase that the Cedi depreciated by 10% over this period of time, making it one of the worst performing currencies globally. In May 2019, the Cedi to dollar rate averaged GH₵5.17 to US$1, which depreciated at a slower rate recording GH₵5.35 to US$1 as at June 2019. This slowdown in the depreciation rate is largely attributed to interventions of the Central Bank on the foreign exchange market after Ghana successfully exited the IMF Program in April 2019.
Ghana’s housing industry continues to remain a dangerous candidate for investors primarily due to its currency weakness which is a result of poor fiscal management and over-dependence on the exportation of raw materials to reinforce fiscal buffers (Jones Lang LaSalle, 2018).
Mortgage Market in Ghana
The mortgage market in Ghana is extremely small however the demand for mortgage loans continue to drastically increase yearly. The mortgage market has seen its GDP grow from 2.5% in 2004 to 3.9% in 2006 and an estimated 10% growth in 2018.
Ghana Home Loans (GHL) and Housing Finance Company Bank (HFC) are the largest mortgage providers in Ghana. Ghana Home Loans is the only specialised mortgage provider in Ghana. Typically, first-time buyers are given up to a maximum period of 15 years for home purchase loans in United States dollars and 10 years for those in Ghana cedi. Loan-to-value ratio is usually pegged at 80% of the value of the property.
Land Titling in Ghana
There are four types of land in Ghana. These are Government Land, Vested land, Customary/Stool land and Private Land.
Government and Vested Lands are owned and controlled by the government. In Ghana, depending on the location of the land, in order to acquire a Government or Vested land an application must be sent to the Regional Lands Officer or the Executive Secretary of Lands.
Customary/Stool Lands are owned and controlled by Chiefs in Ghana. They have the power to sell lands that fall under their jurisdiction. The 1992 Constitution of Ghana however states that no freehold interest must be granted in land.
Private Lands are customary lands granted to families and individuals before the 1992 Constitution. Private lands are owned and controlled by the rightful families or individuals. In order to acquire a private land, one must directly deal with the rightful families or individuals.
3.1 History of Housing in Ghana.
Housing generally used to term any form of dwelling for the purpose of sheltering people , plays a major role in societies around the world. Housing can be defined as one of the primary needs of humans, for the purposes of safety as well as shelter. Against this backdrop, Article 18 of the 1992 Constitution of Ghana emphasises that the right to adequate housing is directly related to the benefits of other human rights such as education, health and the safety and security of an individual.
In as much as Ghana’s constitution explicitly ensures the protection of the right to adequate housing, it provides for its citizens the right to own property either alone or in association with others. It also provides for its citizens the right of an individual to enjoy protection from the deprivation of one’s property, as well as non-interference with regards to the privacy of one’s home.
In the past, a house was regarded simply as a shelter, independent of everything else, having no direct correlation on the well-being of the occupant other than just the physical. In our contemporary times this definition is viewed as a totally incomplete concept of the correlation between people and their environment (Medears,1973). Many governments across the globe have turned their attention to the rising challenges facing the housing sector and how best to solve it, considering the role affordable housing could impact on the economic growth of their countries. Governments together with international agencies have over the period of years come up with policies that will ensure barriers limiting the people from accessing decent and affordable housing are removed or become nonexistent. It is worth noting that the Habitat Agenda (Habitat 11) that is the UN conference on human settlements, which was adopted in June 1996 to serve as a roadmap towards a developing world, spelt out clear strategies and approaches for the achievement of adequate shelter for all, and also for the sustainable development of the world’s urban centres (Payne and Majale, 2004).
Further to this, one can however observe that in these recent times where countries are experiencing increasing economic growth and development, the housing sector over the years has been wrought with numerous challenges and Ghana’s housing history is no exception.
3.1.1 Housing during the Colonial Era
The position of government during the colonial era was that of a non-participatory role, until the formulation of the Earthquake Victim’s Housing Scheme in Accra in the year 1939. This scheme was set up to enable the government to build subsidised public housing units for victims. This housing scheme thus commemorated the beginning of estate housing in Ghana. Prior to this, only expatriate public servants as well as representatives of European countries working in Ghana at the time, were covered or catered for by housing schemes providing accommodation.
In 1939 a devastating earthquake which occurred in Accra marked a turning point for the housing sector in Ghana. The Earthquake Victim’s Housing Scheme was thus commenced by government to provide sponsored housing for victims of this natural disaster. This eventually became the commemoration of estate housing, which will later become the benchmark of government-built or assisted housing schemes in the country. In support of this initiative, a substantial budget was allocated for these housing projects, commenced in the early 1940s. The Colonial Development and Welfare Act (CDWA) funds thus allocated a 2.5% of its finances to help improve the housing deficit in the country, which was gradually disseminated through various regional bodies. The percentage of funds allocated for housing steadily improved by the early 1950s from 2.5% to around 5.6%, ten years after its implementation.
Later in 1943 Governor Sir Allan Burns established a Development Plan for the Gold-Coast colony, currently known as Ghana, amidst other things, which included a proposal to construct estate houses for small income earners residing in large towns across the country. It is worth mentioning that this has been cited as one of the most relevant and extensive plans ever developed for Ghana with a focus on economic and productive services that contributes to the growth of the country; the 1951-1958 Development Plan. This plan saw the inclusion of the housing sector as part of the overall development framework of Ghana. Housing was then placed in fourth position on the country’s plan budgetary allocation.
Due to the large financial resources allocated to the housing sector, Ghana was able to experiment with a wide array of housing schemes, which alternated from subsidised housing to housing loan schemes. An example of this was when around this same period, the three largest urban regions in Ghana comprising of Accra, Kumasi and Sekondi-Takoradi were allocated £2.5 million. Within this fund, government interventions such as loans of up to £1,600 was to be support people who desired to build their own houses, and also an amount of £500,000 went into housing projects to transfer areas earmarked as slums into urban dwellings. For the duration of this entire period, housing schemes outside the afore-mentioned three urban centres were basically nonexistent, together with the exclusion of families of low-income earners families from benefitting from these schemes.
Further to this, it has been observed that prior to Ghana attaining independence in 1957, the First Ghana Building Society (FGBS) was established in 1956 to solicit for funds as well as lend to its members for the purpose of housing. In spite of this, the initiative wasn’t sustainable by the ruling government after independence as a result of the economic decline of the 1970s. The National Redemption Council (NRC) tried to salvage the situation in 1972 by establishing the Bank for Housing and Construction, which was to be solely responsible for financing the construction and housing industry. The purpose of this housing bank for which it was established was later discontinued with commercial banking becoming its focus of operation, after the overthrow of the NRC government in 1979. Around that same period the Social Security and National Insurance Trust (SSNIT), which was also in operation around the 1970s was assigned the added responsibility of providing public sector workers with rental accommodation at inexpensive rates. In addition, there were numerous attempts by the state to revamp the housing sector with housing schemes. Among these were the “Building Societies, Roof and Wall Protection Loan Schemes, Rural Cooperative Housing Schemes, etc.” The state around this period was the primary stakeholder in the housing sector.
It was later after the economic decay in the 1970s that private financial institutions began to invest in the housing sector which saw the birth of the housing finance industry. In light of these occurrences, the Standard Chartered Bank, the Ghana Commercial Bank and Barclays Bank presented few borrowers who fell in the categories of affluent, prominent or in high-level government or bank employments with restricted mortgage finance. Notwithstanding, these financial institutions were observed to have been afflicted with a common problem of ‘borrowing short but lending long’, a situation which ended up depleting all their equity in a time of hyper-inflation. Due to this situation, around 1990, Ghana experienced the situation of a total absence of long-term mortgage finance. By virtue of this, Ghana’s attempt to provide solutions to these challenges saw the establishment of the Home Finance Company (HFC) Limited in 1990. The primary purpose of this institution was in providing housing finance for formal salaried workers, as a secondary financial institution. It is worth noting that these efforts made in the housing sector were targeted at the few formal sector salaried workers, dwelling in the urban areas of the country.
3.1.2 Overview of Past Housing-Related Policies in Ghana (1945-1990)
In 1957, a renowned journal; The Economist, declared Ghana as Africa’s sub-Sahara’s wealthiest African nation with the most stable economy. In view of this, international observers were drawn to foresee other aspects of a growing economy prior to the stability of the country’s economy, whose increasingly growing economy established the country to be in the position comparatively better than other sub-Saharan African countries, as explained in the journal. This is because of certain records of great estimates which favoured it on the global front in the 1960s; with reference to the journal. However, these estimates spoke otherwise a different economic reality out of Ghana’s favour, thereby affecting the country’s targeted future.
Ghana spans a total geographical outline of about 92,000 square miles, similar to that of England; of the United Kingdom. In addition to this, the strong colonial relations both countries had in the past gave Ghana an upper hand to be in the best possible position to develop itself. Even under British colonial rule, the Gold Coast was considered by the British authorities as “its model for Africa.” Being the first country in sub-Saharan Africa to gain independence from colonial rule in 1957. The British authorities rated Ghana(formally known as the Gold Coast) as “its model for Africa” during their colonial rule. This is because of the Gold Coasts attainment of Being the first sub-Saharan African country to gain independence from colonial rule in 1957, empowering the country with possibilities of success in various areas of development; hence, becoming a ‘beacon of hope’ for Africa. according to an economic survey by the Government of Ghana in 1957, the country documented a respective Gross Domestic Product (GDP) of $544 million in 1950 and a Gross National Product (GNP) of $526 million. Also, Ghana amounted a total reserve income of $532 million in 1955, with a per capital income of $490 and $500 in 1957 and 1960 respectively. The following statistics situated Ghana’s economic growth to ‘middle – ranking’ countries like South Korea.
With reference prior, the government of Ghana during the British colonial era built so many houses which were financed by the British central government. This investment in the housing sector emerged to the outdoor of the Department of Social Welfare and Housing (DSWH) in 1945, thereby implementing these housing schemes into fruition; thereafter ensuring the establishment of seven affordable housing estates in Accra, Takoradi, and Kumasi from 1946 to 1948. There was limited access to these facilities purposely geared toward the accommodation of colonial administrators, civil servants, war veterans and public servants in the above-mentioned urban areas; through which low income families were exempted.
Thereafter, the colonial government become more involved in the housing sector during the 1950s, heavily investing a ground-breaking offer of about £2.5 million toward public and private owned housing schemes. Sadly, the shelter needs of the rapidly increasing urban populations rendered what seemed to be heavy investments effortless, thereby narrowing funds from the public towards the niche. This resulted to lots of low-income inhabitants being side-lined to run down houses and rented apartments.
After Ghana gained independence, the government in power prioritised adequate housing or the general population, Resulting to an overwhelming public initiative for the provision of adequate housing from the 1950s to 1960s. Therein, the government proposed a 1959 – 1964 Development Plan, consisting of the construction of 6700 housing units, resourcing 200 units to be constructed for middle-income homes, 1500 units for low-income families, and 5000 buildings for labourers; at £2000, £500 and £200 per unit respectively. In addition to these, a Seven-Year Plan (from 1964 – 1970) proposed 60,000 new housing structures throughout the country for £44.5 million; Through which £31.3 million targeted commercial housing and 13.3 million portioned to low-income housing.
During this interesting period of transitional development, the government created so many state-owned enterprises (SOEs) to facilitate these projects. Several other enterprises included: the Ghana National Housing Corporation (GNHC), State Housing Corporation (SHC), and Tema Development Corporation (TDC). Also emerged other bodies like the Bank for Housing and Construction (BHC) and the Low-Cost Housing Committee (LCHC), which embodied a pseudo-government structure. However, the implementation differed from the initial plan itself because of a redundant output by these SOEs and pseudo-government agencies, statistically misappropriating about 70% of the initial over 80% which was provided by the government for the housing sector at the time.
Unfortunately, the housing sector was affected by this abysmal management of funds. SHC; the nation’s largest agency for housing, who constructed only 24,000 housing units from 1957 to 1990 clearly set a woeful example. Government owned houses were rented out to SOE employees, public and civil servants at extremely low prices, leaving the masses nothing but to build or rent their own houses with only a verbal support from the government. On the other hand, policies of succeeding governments were target ed toward getting rid of slums as measures to help resolve these housing problems and eventually gearing up to better housing projects.
During the 1980s, the progress of the housing developmental sector was impeded due to an extensive growth of the human population, expensive cost of houses, very bad housing conditions as well as poor sanitation services. These factors severely depleted a well-planned look in the housing sector.
As a matter of fact, a draft National Housing Policy was forced to statistically label these housing problems as “one of national development crisis.” Housing Developers then had to estimate a well documented 70,000 units each year, with an accrued supply deficit of 250,000 units which needed to be taken care of in order to control the crowded urban units from 12.8 persons per unit to the tenancy rate of 7.0 persons per unit.”
Considering this, policy makers saw the necessity in changing policies surrounding housing in Ghana at the latter end of the 1980s. To relieve government’s responsibility on the provision of housing to the populace, policy makers began to turn their focus on opening up the economy and removing restrictions on land, the housing market, and lastly businesses surrounding the construction industry.
According to a publication by Harris and Arku (2006), a recent indicator for modern governments to invest in the housing sector is due to the observation that the growth of the economy had a direct correlation with the growth of housing infrastructure. Harris and Arku in a much earlier publication further observed the change in the opinion of stakeholders within the sector on issues regarding housing markets from the year 1945 to present. They further observed that before the 1960s, the development of the housing sector was considered a burden rather than a positive indicator for the growth of the economy. Thus housing was associated as being the primarily the responsibility of society and hence was given little to no attention by the government. Others with opposing views over the course of years were able to change this narrative with the argument that the flow of capital resources in the housing sector also spelt out development for the economy. A typical example was the establishment of company settlements.
The 1960s saw a shift in the generally accepted view of stakeholders in the sector. Simultaneously, the World Bank and other international organizations as well as research bodies on housing began to highlight the different ways by which developing the housing sector could result in the growth of an economy. These international agencies emphasized on the need for governments to invest in housing, in order to create employment as well as the enabling environment which fosters economic growth opportunities and the promotion of positive social impacts of having a well-planned housing sector. In light of these conditions development economists, have appreciated the contributions of the housing industry to economic development. However, it cannot directly be pointed out the reasons for this turn of events.
3.1.3 Housing Policies in Ghana During the 1990s
The government of Ghana in the early 1990s, during the Jerry John Rawlings administration, attempted to amend housing policies based on neo-liberal ideas in order to effect changes in the general economy. Due to these policy reforms, housing production, in particular, has since been left to the private sector, with government acting as a ‘facilitator’.
According to the 2010 population and housing census, 47.2% of Ghana’s housing stock was observed to be owner-occupied, 31.1% was made up of rental units, whiles 20.8% made up of rent-free with recording 1.0% respectively for the entire housing stock of the country. A Rent-free house is used to classify compound houses or housing units which are usually used to house extended families years after the demise of their original owners. Although compound houses, representing a 51.5% of the housing stock in the country in both urban and rural localities, this percentage has begun to see a sharp fall. From 1990 to the year 2000 compound houses in the capital city of Accra has seen a reduction in the housing stock with a record percentage of 62% to 42.5%. Much more modern housing units such as bungalows, flats and other structures such as kiosks, make shift shacks, and many others are rampantly springing up at an increasing rate with the phenomenon of rural urban migration. These contemporary housing units were observed to represent 2% of the country’s national housing stock whiles having a regional housing percentage of 6.2% for the Greater Accra Region. Among the general percentage of housing stock for the country, only 3% of these were owned by employers. It has again been observed that people living in single rooms has seen a sharp increase across the country estimated at 44.5%. In the Urban and Peri-urban areas of Ghana this figure is even much higher at the regional level: 64.5% was recorded for the Ashanti Region, Central Region recorded a 64%, and the Greater Accra Region recorded a 61%.
With government’s attempts to comprehensively scale up on the nation’s housing development post-independence, quite a number of policy documents were prepared to help achieve this purpose. Such documents include: The First National Housing Policy Document in 1986; subsequently followed by the 1991- 1992 National Shelter Strategy Development which was prepared in conjunction with UN-Habitat. Later the National Shelter Strategy Volumes One and Two, developed in 1993 succeeded it. Ghana later became signatory to the Istanbul Declaration and the Habitat Agenda in June 1996; which resulted in the revision of the National Shelter Strategy Volumes One and Two in December 1999 and June 2000 respectively. Against this backdrop it is thus fascinating to observe that none of these documents on housing policy has been implemented officially in any part of the country. It is therefore surprising to note that not one of these mentioned documents has been accepted formally and adopted officially for usage in Ghana as a substantive policy. Presently, “Ghana does not have a tentative housing or urban policy.”
It is therefore paramount to try and ascertain why Ghana, after a thorough circumspection in setting housing policy in conjunction with both local and foreign bodies has still not been able to implement these policies as practically demonstrated by developed countries.
Housing Policies and Interventions between 2000 and 2014
With the aim of strengthening the housing liberalisation strategies of former president Jerry John Rawlings’ NDC government, the then government led by President John Agyekum Kuffour decided to directly undertake investments in housing on a small to medium scale. To achieve this objective the Kuffour government sought international funds in 2001. The World Bank through its Highly Indebted Poor Country (HIPC) debt relief program granted some funds for housing. A further 10 million euros was received from a bank in Belgium through the HIPC programme. The funds were to be used to develop infrastructure for new affordable housing projects around Amasaman (Benjamin, 2007). There was still a severe housing deficit due to the minimal and ineffective interventions made by the government during its first term in power.
In order to control the crisis, the Ghana Poverty Reduction Strategy (I & II) incorporated housing as an important part of the strategy. Through this strategy the Ghana Affordable Housing Programme (GAHP) was introduced in 2005 to run till 2011. The programme aimed to effectively provide affordable housing to 60,000 people or 12,000 with low to middle household income by building 10,000 affordable housing units (Arku, 2009). Mortgage finance schemes were also made available to help alleviate the likely issue of lack of funding that the low to middle income families could face in their attempt to secure the affordable houses built. The government partnered with the Housing Finance Company (now the HFC Bank Limited) and allocated $10 million to be used for the mortgage scheme which was dubbed “Ibid”. The Ibid scheme offered a maximum of GHC25,000 to prospective beneficiaries for the acquisition of affordable housing with repayments amortised over a 15-year mortgage term. An initial amount of $70 million was used to fund the project of which $30 million was loaned from the Social Security and National Insurance Trust (SNITT) and $40 million sourced from the HIPC fund. By 2009 the affordable housing project had come to a standstill and was later confirmed by the Ministry of Water Resources, Works and Housing in its 2009 annual report. The affordable housing programme therefore collapsed two years before its intended completion. The collapse was blamed on delayed supply of building materials, unwarranted political interference, the use of too many contractors (about 400) and the gross lack of funds needed to see the project to completion. It was observed that most of the contractors abandoned their projects and the site riddled with uncomplete units have become home to miscreants and squatters. To date, out of the 10,000 affordable housing units that were set out to be built with the investment of $70 million, 5,300 units were completed, and 4,700 units were uncompleted nationwide. Subsequent governments have made little effort to provide funding to revive the affordable housing project that was started by the President John Agyekum Kuffour government.
In 2010, a new government led by President John Atta Mills attempted to introduce a large scale nationwide affordable housing scheme. The housing project called the STX Housing Programme sought to provide 300,000 affordable housing units over a period of five years through a Public Private Partnership. The programme was a joint venture between the government of Ghana and the government of Korea. The project aimed to not just provide affordable housing but was also designed to provide massive employment opportunities and increase foreign direct investments in the country. Investigation into the project revealed that the company that was expected to undertake the pre-financing and construction of the project did not have the needed financial capability. Other irregularities and suspicions of shady government deals contributed to the termination of proposed affordable housing project. The government then attempted another affordable housing deal, this time with Shelter Afrique Kenya and Guma Group South Africa but failed for undisclosed reasons.
In December 2012, the then government, under the leadership of President John Mahama secured a loan of $400 million from Barclays Bank and Credit Suisse for Italconstruct International and Construtora OAS Ltd to construct 9,120 housing units at Saglemi-Old Ningo. Earlier that year Messrs Amandi Holding Ltd had been contracted to build 168 housing units for security services in Tema for GHC 45 million.
In April 2013, the government also allocated 95 acres of land at Kpone to M/S Sethi Realty Limited. Through a Public Private Partnership agreement, the government aimed to construct 5,000 affordable housing units. The project was labelled “Nyame Dua” Estate.
In 2015, the Ghana Shared Growth and Development Agenda was introduced under the then government led by President John Mahama. They incorporated the provision of affordable housing into their medium-term objectives. The government also adopted a Real Estate Agency Bill, Condominium Bill, Building Code and a Draft National Housing Policy to ensure that adequate regulations were in place. These newly adopted regulations were aimed at establishing a National Housing Fund for supporting small-scale local building material producers, slum upgrading and mortgage provision. Due to lack of funding, public limited liability companies were encouraged by the government to complete some of the 4700 abandoned affordable housing units from the Ghana Affordable Housing Programme. The Tema Development Corporation (TDC) was allocated the 1,526 housing units at the Kpone site and 1,478 units from the Borteyman site was allocated to the Social Security and National Insurance Trust for completion. Despite all these efforts, the country still suffered a housing deficit of an estimated 1.6 million units largely due to clear policy direction.
3.2 Present Housing Situation in Ghana
Clearly, the issue of housing has become a key area that has been highlighted by previous and current governments respectively and has become an integral areas for development. Different scholars have diverse definitions when it comes to housing. The business dictionary (2006) defines housing as being buildings or structures for which individuals and their households live in, that meet certain federal regulations. Factors that influence that difference in housing characteristics vary for every individual, and this may include age, size of family, and the income levels of an individual as well as their geographic location. For example an employee working in an urban city like Accra may choose to live in a rented apartment within Accra whereas a successful entrepreneur may live in a house with or without a mortgage. The concept of housing according to the Government of Ghana (2009) is thus defined as consisting of the physical infrastructure and the complimentary services surrounding its value chain, to include land as well as the financial resources required in constructing and maintaining it. The above definition as described by the government of Ghana for the purpose of this study, aptly supports the narrative that when housing is understood to basically mean shelter or living space, housing units and settlement areas tend to be set up without consideration of the environment and the services required to support livelihood of dwellers. (GSS 2005)
Housing is viewed as a solution to improving upon the environment and social structure in which it exists thus has been recognized as an essential tool. Socio-economically, housing is known to have an immense impact in every country hence a very essential investment (Yalley and Ofori Darko 2012). It is very essential because of its effect on the economy and the security it provides to the families, and communities. Housing has been well recognized by the United Nations as a tactic of alleviating poverty (UN-HABITAT, 2004). Housing is a basic human right hence it’s only fit to treat and recognise it as a major priority. It is neither just a government’s strategy to alleviate poverty nor develop the economy but also to appreciate humanity of the concept of housing. There is a direct link between the satisfaction of human rights such as education, security, and health and the right to adequate housing according to the Constitution of Ghana, Article 18. Despite Ghana’s Constitution’s inability to ensure the right to adequate housing, it gives the right for any individual or association of individuals to own properties. It also provides the rights for owners to enjoy their property with privacy, without interfering and denying the owner of the protection provided by the property.
Ghana’s housing status, on the contrary, has been on a downward spiral, especially in Accra, the nation’s capital. This has been the case in many other urban areas but especially in Accra because of the increases economic endeavours. Evidently, rural migration to urban cities in search of greener pastures has been the story of the day. The challenge is realised when the existing urban population is further multiplied as a result of the rural inflow hence accommodation becomes insufficient. There is an increasing shortage of housing in Ghana just like many developing countries. There is an increasing rate in population of 2.7% per annum however there is a deficit in the housing units available to support this increase in population and the case does not improve by the year (Ghana Statistical Services, 2000). The Ministry if Works, Housing and Water Resources provided statistics in 2010 that portrayed that across the nation, there is a shortage of 400,000 units of houses. Further on, it estimated that an annual nationwide provision of 120,000 housing units will be required to curtail this deficit. Currently, about an annual 42,000 units is the supply capacity leaving an annual Sixty percent 60% of the national deficit unsatisfied.
Families that earn modest or low incomes, in a recent housing study, were concluded to be the group of individuals that most need government intervention in terms of provision of housing. This group represented 70% of the population according to the study that was undertaken as part of policy exercise presented in an article on the 4th October 2010. These people make up the target groups to which exceptional devotion should be concentrated, Segbawu (2010). The housing deficit problem has not been improved much regarding the methods, used by both the public and private sectors, in attempt to override the deficit. The impact made on the low earning populace has been only minimal despite the large percentage unattended. Even when housing schemes are purposefully directed at the urban poor, they still remain out of their reach (Draft National Housing Policy, 2009). As an attempt to provide the best solution for themselves, those who are not privileged to affordable housing have turned to settlements and slums that are not authorized. They however still stand a high chance of being evicted at any point in time.
Presently there is an estimated 924 million people already inhabiting settlements as such. This estimation by the UN depicts a subtle expression of poverty as a result of urbanization. To curb this situation, mass housing projects should be undertaken as quickly as possible. The hindrance, however, is if it is feasible, especially in this present economic status where financial capacities are unable to handle building materials for projects like these (Norton and Cain, 1978).
Approximately sixty percent 60% of the Ghanaian household reside in single rooms according to the UN. This is a clear depiction of crowding in the urban areas. Those who own their own homes are only one out or four households and the rest are living in family houses paying no rent or renting a place of abode. (UNHABITAT, 2011). In summary the above statement explains that only a few rich individuals have the opportunity to enjoy large urban settlements. This results from struggles and difficulties that come with owning properties in these areas.
The nature of tenancy in recent times has made renting a housing unit more challenging. Under the liberalized economic environment, landlords determine rents, and thus, tenancy relations under economic and political influences affect the level of housing investment; hence both landlords and tenants react to the prevailing conditions (Yankson, 2010). Furthermore he stated that tenancy relationships are minimally affected by tenants that earn low incomes. Low income earners are at the mercy of landlords’ decisions because the large population of such individuals create keen competition for cheap housing units. Also, the liberal state of the housing market allows landlords to create unfavourable circumstances for low income earners without apology.
3.3 Housing Characteristics
An estimated number of 2,181,975 housing units were recorded from the recent population and housing census in Ghana in 2010. A total of 3,877,418 structures were reported to be the dwelling places that had been counted in the census. This implies that a total of an astonishing 1,695,443 dwelling places were unfit for individuals to reside in. In other words, 1,695,445 housing structures did not satisfy the most basic description of a place to live or dwell. Structures such as abandoned salon cars and wooden kiosks amongst many such places, amount to this figure.
According to the Ghana Statistical Service, the census produced a classification of 10 dwelling habitations.
Listed below are the various classifications;
• Semi-detached house
• Detached house
• Improvised house (Kiosk/Containers)
• Rooms in a compound houses
• Living quarters attached to shop
• Flat or apartment
• Hotel or hostel
• Camps or tents
• Huts
• Others
Compound houses, which represented 45% of residing houses with respect to the classifications, were found to be the most common places of dwelling. Compound houses in both urban and rural areas constituted the 45%. Detached or Single houses were second in order with 24.1% in terms of the most common dwelling places according to the statistics. This was followed by semi-detached houses representing 15.2% as the third most common dwelling places. Apartments and flat captured 7.2% most common places of dwelling in the fourth order. The classifications remaining characterized inner chambers of shops and wooden kiosks which were found mostly in the most economically vibrant regions of the country; Greater Accra and the Ashanti region. These dwelling places often have a dual purpose of serving as both dwelling places and commercial centers. This can only be explained by the phenomenon of large rates of rural urban migration.
Below is a figure depicting Ghana’s housing distribution.
Figure 1 Housing Distribution in Ghana
Source: Research Department of Bank of Ghana
3.3.1 Type of Housing
Past surveys have revealed that the types of housing units produced by Ghanaian estate developers comprise of condominiums, detached and semi-detached homes and in addition luxury holiday homes and student hostels. The most variant form of housing preferred by developers is the detached home with a percentage of 72.7%, followed by the semi-detached at a percentage of 63.6%. It is imperative to note that a vast majority of estate developers sampled for the survey that is 86.4%, were into the production of offices and stores with very little to no interest in the production of infrastructure tailored purposely for housing students. The table below shows the type of housing units preferred by estate developers in Ghana.
Table 1 Housing Units Preferred by Estate Developers in Ghana
Source: Bank of Ghana: The Housing Market in Ghana
3.3.2 Location of Operation
For any business to be successful, its proximity and accessibility to the target market is very important for any business venture, and the housing industry is no different from this rule. Accessibility of the target market to the business enables good publicity and advertisement which drives demand, profits and even helps in setting favourable prices. Establishing a business in a bad location on the contrary gives a reverse effect. The Ghana Real Estate Developers Association purports through their publications that a greater number of property developers in Ghana are located in the Greater Accra Region, specifically in the Tema and Accra Metropolitan Areas. Property developers who operate in these areas constitute not less than 70% of the total number of property developers in the country. The other areas of operation preferred by developers were the Ashanti region, Western Region and Central Region respectively. This trend was again observed with location having a correlation with the length of operation, thus longer serving developers being located primarily in the Greater Accra Region, followed closely by the Ashanti Region.
Table 2 Location and Length of Operation
Source: GREDA (publication reference and year)
3.3.3 Pricing of Housing Units
Prices of housing units in Ghana are characteristically quoted in foreign currency, specifically the US Dollar. The reason why develops set pricing values in foreign currency is to curtail the risk of exchange rate fluctuations. Against this backdrop the cedi equivalent of the unit prices tends to be very high and unaffordable for the average Ghanaian. Foreigners and the expatriate community are usually the target market for these housing units. The table below depicts average pricing of the various housing units in the country.
Table 3 Housing Type and Average Pricing
Source: GREDA (publication reference and year)
From the observation of a field survey carried out to analyse factors that influence housing pricing, 86% of the total respondents attributed causes of persistent pricing to the high cost of raw materials. The second factor observed to have an effect on pricing was the high cost of land. The table below illustrates the causes cited by respondents as influencing housing pricing.
Table 4 Causes of Increased House Prices
Source: Bank of Ghana
3.4 Distribution of Population and Housing Stock
It can be acknowledged that there is an undeniable correlation between population and housing. This statement can be said to be true in Ghana as well. The year 2000 Population and Housing Census (PHC) carried out by Ghana Statistical Service recorded the country’s population at an estimated 18,912,079 million. This figure reflects a double increase in the previous population census carried out in 1970. The regional population distribution as recorded for the PHC 2000 revealed that Greater Accra region had the highest growth rate at 4.4%, followed by the Ashanti region with a 3.4% growth rate, then Western region recorded a growth rate of 3.2%, the Northern region 2.8%, Brong Ahafo region 2.5%, and a 2.1% growth rate for the Central Region. The remaining regions recorded a population growth rate of less than 2%. The Population and Housing Census further revealed that a striking 56.3% of the total population were rural. In terms of urban population, the Greater Accra region recorded the highest population of 2,539,221 million people.
Figure 2 Distribution of Population, Stock Houses and Households.
Source: Research Department of Bank of Ghana (publication reference and year)
With reference from the above table, the issue of overcrowding is of great concern in most households. Based on this table, it can be observed that on average 8.7 people live in a single house at any given time. The region which recorded the highest housing stock was the Ashanti region having 15.1%, which directly corresponds to the regional population size. However the Greater Accra region recorded the highest urban housing stock of 80%. It was further revealed that the average size of every household was 5.1 people, with 1.7 households in every housing unit and 2,181,875 housing units. Comparing this number of households to the total population, it can be concluded that there is a large housing deficit in the country. If the average household of 5.1 people were to be allocated housing units of their own, then with an estimated population of 20,000,000 people, Ghana will need 3,708,250 housing units in place of 2,181,875 units.
Figure 3 Rural/Urban Population Distribution (millions), 2000
Source: Ghana Statistical Service
With a growth rate of 2.7% in the annual population, it is estimated that there will be an increase in population from the current estimate of 20 million to about 26 million by 2010. This suggests that there is a need for about 665,920 more housing units to be developed by the year 2010 to shore up the growth rate of the country’s population, assuming all values remain constant in light of the findings of PHC2000. Below is the estimated yearly housing units needed in the country.
Table 5 Yearly Deficit of Housing and Housing Stock
Source: 1960, 1970 & 2000 Population Census
3.4.1 The Build or Mortgage Issue
On the issue of gaining shelter in Ghana, a household is mostly presented with three main options. These options are to mortgage, to build or to rent. The most preferred and reliable mode of financing in developed countries is mortaging. Acquisition of a housing unit is usually a toplisted item in most households, yet irrespective of the eagerness of households to try and own houses, the housing market in Ghana is woefully underdevelopped. A large majority of households will first rent apartments in the initial stages, and with the growth and increase in their income and earnings, they gradually move to investing in the housing industry. At this stage, households are presented with the choice of either building a home or mortgaging one. These options are mostly influenced by their sources of income as well as availablity of land.
A key issue with building ones own house in Ghana is the absence of safe, straightforward access to land title. Most applications for land titles end up in the backlog. This tends to affect the land market and the growth of the mortgage market, since it is unable to use land as security for mortgage financing as there are multiple sales of land coupled with titles and land tenure that are insecure (Asare, et al., 2006).
Evidence shows that it takes 6 to 16 years for an individual to build a house in Ghana. As a result of unstable macroenvironment the cost of construction affacted greatly due to the excessive time spent on building one unit. After large amounts of moneys are invested in projects but many projects are left uncompleted or dormant. In the Ghanaian housing market mortgaging is important for its productive growth.
Figure 4 Land Title Certificates Issued Between 1990 to 2006
Source: RICS Research Paper Series
Self-Help/Self-Build Housing in Ghana
Self-help housing also known as self-build housing has been present in developing countries long before long before modern development planning and housing (Pugh,2001; Nnamdi, 2011). There are three main variants of self-help housing namely:
i. Aided Self-help Housing: In aided self-help housing land and services are provided however construction of the housing unit is the responsibility of the individual or household.
ii. Unaided Self-help Housing: This variant involves absolutely no government involvement. The individual or household is responsible for purchasing a plot of land, finances, acquiring materials and labour for building the housing unit.
iii. Institutional Self-help Housing: This variant involves government implementing self-help initiatives through community-based institutions like housing cooperatives (Ntema, 2011).
Self-help housing has attained a near-permanent status in Ghana due to the governments’ inability to supply sufficient affordable housing for the country. The laissez-faire model of self-help housing is the most common in Ghana. Self-help housing is responsible for supplying 95% of the housing stock in Ghana and contributes an estimated $300 million per annum to the economy (World Bank, 2010). In Ghana, self-help is practiced not only by the low-income households but also the middle and high-income households.
In Ghana the main processes involved in self-build are land acquisition and registration, procure building plan, acquiring development and building permit and lastly construction of the unit. Labour with or without supervision is arranged by the self-builder. Sub-contractors are rarely engaged in self-build projects. The preferred source of labour for self-build projects are unskilled and skilled labour sourced from the informal sector. A typical self-build project takes between 5 – 15 years to complete but despite it being a very slow and painful process it continues to dominate as the largest contributor to housing in Ghana (Ahadzie and Amoa-Mensah, 2011). The process is riddled with architectural, social, institutional, constructional and economic challenges.
3.5 General Factors Affecting the Housing Industry
There are many factors that directly influence the housing industry of Ghana. This section however looks at the general factors affecting the housing industry by adopting the PESTEL model. It looks at the political, economic, Social, technological, environmental and legal factors.
3.5.1 Political
Political factors have significant impacts on pricing, profitability and performance, business start-ups and even industry attractiveness. Tax policies, however, have gained the greatest impact amongst many other political influences. Amongst such taxes that plague the housing industry are; Property Tax, Rent Tax, Real Estate VAT and Capital Gains Tax.
Any property valued above GHC500 attracts the capital gains tax. Buildings land and business assets like shares and goodwill of company attract the capital gains tax. Currently the tax rate is pegged at 15%.
In 2015, the government introduced the real estate tax. It is an indirect Value Added Tax (VAT). Initially the rate was 17.5% but upon review it was reduced to 5%. The newer lower rate was implemented to help attract investors and appreciate stakeholders (Modern Ghana, 2014).
Businesses that have rent as their source of income pay the Rent Tax. The year’s gross amount taxed. The rate is currently at 8% (Price Waterhouse Coopers, 2014)
In Ghana, compared to many other countries, property tax is lower. The property attracts a specific rate depending on where it is situated. How much property tax is paid is determined by whether the property is situated in class rated zones marked out by the country. The value of the property is also a factor that determines how much property tax is paid. This implies that the higher the value of the property the high the property tax paid (Lamudi, 2014). Below is a table depicting various classes and their corresponding rates.
Table 6 Residential Classes for Property Tax with their Rates
Source: Local Government Bulletin (2014)
3.5.2 Economic
The economy of Ghana has been modeled by other African countries as fast growing. The economy of Ghana also has a direct impact on the housing market. Increased economic growth and stability promotes sales and demand in the housing market. Decline and unstable economy, as a result of poor performance of the Ghana cedi (GHc) alongside the US dollar, causes a massive fall in sales and demand. These impacts cause increased exchange rates because housing units will be priced in US dollars, thereby increasing the Ghana cedi equivalent. This dynamics greatly affects the interest of potential customers.
3.5.3 Social
Social factors such as change in lifestyle and trends also impact the housing market significantly. The income of the Ghanaian populace determines the height of social impact. Real estate developers are patronized by individuals that earn higher income compared to lower income earners who do not patronize real estate developers. This is mainly because of the depiction that real estate housing is a thing for only the rich.
3.5.4 Technological
Technology has become an efficient way of getting work done faster. The faster the performance the more it affects sales positively. The Ghanaian housing market, however, has not gained this technological advantage to getting work as fast as in the western housing market. In the western market, construction is done using more sophisticated machinery to remain competitive in the market. Technology has affected the Ghanaian housing market positively, for instance, in the means by which they advertise products. The use of smarter means of getting closer to the customers, such as websites and mobile applications, has enhanced their marketing and customer satisfaction greatly. Technology however has significantly curbed the rising costs of television commercials.
3.5.5 Environmental
The housing industry and the environment have a very close relationship in terms of regulation and the procedures of construction. For instance town planning has regulations as to locating structures or buildings in water channels or flood prone areas that need to be adhered to. Various town councils are to be consulted to ensure adherence to council plans and environmental safety. Constructions cannot be undertaken without informing the council or undergoing thorough land inspections. In assessing the land, a survey is conducted to determine the state or quality of the land. In recent times both the market and the industry are keen about waste disposal and management. Despite the few waste management companies available in the country, it is still a very essential subject in the real estate business
3.5.6 Legal
In Ghana, the legal system with respect to the housing industry is considered to be weak. This is as a result of a rise in land litigation cases. Land disputes are seen o be common and rampant with a backlog of about 26,000 cases presently in court; some of which have been waiting for decades (Wily, 2003)
3.6 Government Policy Responses
As part of general development problems in third world countries is the housing problem. As a policy, a few urban centres have been designated to accommodate mass rural migrations. Policies such as this have an effect of increasing the need for urban housing. Serious urban housing will have to be embarked in order to ensure an excellent execution of this policy. Emphasis would have to be placed on correcting the imbalance by increasing development rates in these rural areas, villages and service towns, to the point of making these groups as self-reliant as possible
According to Payne and Mayale, (2004), urban growth has been accelerating for the last few decades and shows no sign of stopping in the foreseeable future. Many governments have embarked on attempts to curb urban growth. These control measures have not been compatible with the freedom of movement principle embedded in most democratic constitutions hence expensive and inefficient. Page and Seyfried (1970) note that it is unlikely that the housing problem can ever be solved satisfactorilyso long as population continues to grow and with the excessive size of cities. In broad terms, Ghana’s housing policy has been branded as fragmented and piece-meal, and not comprehensive enough (NDPC, 2010; GoG/MWRWH, 2009).
In the provision of housing, the private sector is evidently more efficient than the public sector and this is especially true in developing countries. There are many challenges associated with providing housing and this partly the reason why government avoids it. About 80% of housing in Accra is provided by private entities therefore affordability becomes an issue for low to middle income households to acquire houses. This is as a result of the readiness of the private sector to capitalize on the deficit and access its profitability rather than to help address the shortage problem. Furthermore, the responsibility of providing roads, electricity, drainage, the problems of land acquisition, and cost of building materials makes the housing units provided by the private sectors unavailable to low-income groups.
Between 2000 and 2007, a total of 2100 expensive estates in gated communities in relatively small quantities were put up by Ghana Real Estate Developers Association (GREDA). To disfavour the low and middle class income earners, most of their houses were priced in dollars. It is very difficult for private owned housing providers to provide low priced housing units because they depend solely on the market forces and economic indicators. According to Bank of Ghana (2012), the ever increasing interest rate, amongst others, makes it difficult to make housing units available to the low earning groups. Current prices ranges are between US $18000 to US $100,000. Some banks’ attempt to mortgage facilities to help Ghanaians obtain cheaper houses attract high interest rates with unbearable conditions.
Only few banks offer mortgage loans and often their clients are high earning groups because they can afford the interest dictated by the bank according to a research by the Bank of Ghana (2007). Ghanaians that can afford to buy property without mortgage are represented by only eight percent (8%) and the population that can obtain mortgages are represented by fifteen percent (15%) (Segbawu, 2010). Home Finance Company and Ghana Home loans are leaders in housing finance in Ghana.
Even though individuals would wish to personally acquire their own houses, they are unable to adhere to the conditions associated with acquiring one. Urbanites, mostly middle and low income earners would rather rent an accommodation because it’s relatively cheaper than owning a house in Accra. Rentals in recent times have gained more attention. Rental housing is important because it is most essential in providing shelter for the low income households (World Bank, 1984). Averagely, in the cities, it costs an estimated amount of One Hundred and Two Hundred Ghana Cedis per month for a two bedroom facility (i.e. $80-$120). In addition there is a standing issue even in the midst of Rent Control Act (act 220) where rent is demanded for up to 5 years in advance contrary to the stated 6 months maximum advance. This could make the rent demanded exceed a household’s annual income. Most landlords use this to the advantage of tenants since the Rent Control Act is not implemented.
In the year 1963 the Rent Control Division (RCD) started operation and was established under the Ministry of Water Resources Works and Housing (MWRWH) under the Rent Act of 1963, under the Rent Law or Act 220. It was established to monitor and provide principles that guide landlords and tenants relationships to promote socio-economic development in the state. In the midst of conflicts between landlords and tenants the Rent Control Division is consulted to enforce when the conflict cannot be resolved amicably. It is represented with offices in all of Ghana’s ten (10) regional capitals.
Landlords are limited when it comes to charging tenants with rents when prices are properly regulated by the Rent Control Division. Decent houses can be made affordable for even urban low income earners. The regulation, however, may be a great disadvantage for private property owners as it can deprive them from charging reasonable prices that will enable them recoup their investments. The limit placed on the rent charges was intended to enable acquisition of affordable housing for low to middle income households, yet unforeseen consequences may have risen as private developers are unwilling to create rental housing units.
In another instance of house rental, middle men, known as agents, act on behalf of landlords and land ladies and clients interested in renting apartments. The agents charge a commission to the clients for their services and this inflates the total cost of acquiring an apartment. This has gradually become a lucrative activity in the real estate industry.
These, amongst others, are the several reasons why housing demands are more expensive in urban cities like Accra compared to the rural regions.
Contemporary research has revealed that the state’s indispensable contribution to mass housing for the growing urban population has primordial origin. As highlighted by Owusu (2010), the late 1950s and the early 1980s was noticeably the timescale when the role of the state in the provision of mass housing was considered to be active and to a large extent directly involved in the real estate sector, which led to the establishment of two state institutions: the State Housing Corporation (SHC) and the Tema Development Corporation (TDC), with the sole objective to provide affordable housing units.
Evidently, the TDC was set-up in 1952, to spearhead the development of houses in Tema, Ghana’s industrial hub whiles the SHC which was also established in 1956, was responsible for the provision of residential houses in all regions of the country. Concurrently, the Bank for Housing and Construction (BHC) and the First Ghana Building Society (FGBS) played a pivotal function in the development of housing units as these two state-owned financial institutions served as a reliable financial support for public housing in Ghana.
The State’s active involvement in the provision of housing units to the Ghanaian populace continued through the 1970s albeit several military regimes made the country politically unstable. A notable effort during the period of military regime was the construction of low-cost houses in districts and regional administrative capitals under the Supreme Military Council (SMC), which was led by General I.K Acheampong. The impact of the state provision, specifically housing on the Ghanaian population in urban areas was remarkable. This was mainly as a result of the comparatively small size of the urban population in relation to the rural population at that time. However, continuous mismanagement of the Ghanaian economy, the frequent overthrow of successive governments mainly perpetrated by the military rendered the country politically unstable and public housing agencies could not access the requisite financial resources required for the development of the housing units in the country (GoG/MWRWH, 2009; Nsiah-Gyabaah, 2009).
As time progressed, these inadequately resourced state housing agencies could not serve the purpose for which they were established (Songsore, 2003; Nsiah-Gyabaah, 2009). Even at the highest peak in 1985, there was a delivery deficit of 250,000 housing units. Clearly, indicating that the schemes did not meet the target of the country (Ghana Review International, 2002). To augment the results channelled out by other state owned institutions for public housing, the National Housing Policy and Action plan (1987–1990) was implemented (Ghana Review International, 2002).
After the appointment of a committee on 2nd June, 1986, the Government at that time was able to increase the rate at which housing units were developed, mitigated bureaucratic processes in land title acquisition, inculcated the regular maintenance of existing houses and encouraged private sector participation in the development of public housing. As indicated by NDPC (2010) the current government is working around the clock to reduce the housing delivery deficit of about 500,000 units as a concerted effort is being made to deliver befitting accommodation facilities to the growing population in urban areas via affordable housing schemes. Through public-private partnership (PPP), the government seeks to provide 100,000 housing units to low and middle income households.
A study conducted by Payne and Majale (2004), divulges that an apt regulatory framework will have a general consequential effect on urban development and a distinct effect on the use of land, infrastructure services, planning and zoning. The study further reveals that a pertinent framework is a germane tool that aid governments in making a desired impact on the investment decisions of private-sector developers and urban lands and housing markets. In the market that supplies urban housing units, it is impractical to ignore the role played by the private sector as private-sector developers have consistently enhanced the effort of governments in closing the housing deficit.
Multifarious policy documents on housing, dated as far back as the mid-1980s and recent studies have focussed distinctively on the role of the private sector in the delivery of housing. In spite of the fact that there is no clear-cut National housing policies that serve as a benchmark for private developers in Ghana, the private-sector policies associated with housing is addressed under the Ghana Real Estate Developers Association (GREDA), which urges members to adapt the international ethics for building in Ghana (Owusu, 2010). As indicated by GREDA (2007), the capital city and the industrial hub, Accra and Tema, respectively, account for the largest number of registered property developers in Ghana, representing a whopping 70% of the total number of real estate developers in the country. Private real estate developers have built more than 10,954 houses since the association was established (Bank of Ghana, 2007).
3.7 Affordability of Housing in Accra
The development of housing facilities for residential and public use in urban areas is a high-end activity in Ghana (Osei-Tutu and Adjei-Kumi, 2009). In the context of housing, affordability focuses exclusively on the individual’s ability to fully pay for a house, placing emphasis on whether specifications such as the quality of technology and form of the property is compatible with the stream of income of the potential customer. Ultimately, affordable housing is a domicile which is affordable to the occupant of the housing unit (Yalley and Ofori- Darko, 2012). According to the Bank of Ghana (2007), in most households in Ghana, a housing facility is the main expenditure item in a family budget. A plush housing facility usually has a tremendous effect on the income of the household, straining family budgets, reducing income allocations for utility, transportation, health care, savings and education. In the Global Report on Human Settlements of the United Nations, the cost of a complete dwelling ranges from 2.5 to 6 times of the average annual salary ( Okpala et al, 2006).
A person’s ability to rent a house or fully pay for a residential facility in Accra, depends mainly on the income level of the potential customer and partly on the quality of the house being offered for rent or for sale. Sometimes individuals with low income levels wish to acquire luxurious housing facilities in urban areas. This is a challenge in most developing countries, particularly Ghana where access to long-term finance for low-income individuals is non-existent. Additionally, Tomlinson (2007) demonstrated that urban areas specifically cities in Africa are experiencing high rates of urbanization and a constantly expanding, unplanned settlement in urban areas. These informal settlements serve as homes for low-income households and in some cases the middleclass as it is extremely difficult to secure long-term credit to pay for a decent house.
Development Trends in The Capital – Private Developers
Over the past few decades, the capital Accra has seen a tremendous transformation in housing development. The region has witnessed the development of several five-star hotels, western-styled retail stores, high-end apartments and luxury gated communities (Broll, 2019). House prices in Accra range from $70,000 to $500,000 for fully furnished units. This is about 20% higher than house prices in other regions in the country.
The majority of these high-end developments are located in the prime nodes of the capital and have expanded to create newer high-end residential areas. In the first half of 2019,the most expensive property types in Accra were Townhouses and Penthouses with selling prices ranging from $450,000 to $2.7 million. High-end apartments have prices ranging from $85,000 to $620,000.
Increase in High-End Development Trends
According Broll (2019) most developers have increased construction activities over the years with the cast majority focusing on the construction of high-end housing units. Major developers like Manet, Wonderworld Development, Trassco, Capemay, Imperial Homes, Clifton Homes, Taysec, Gold Key Properties and Devtraco Plus are all high-end-focused. This has created a trend influencing newer developers like China State Hulong Ghana Limited and Shandonia Properties.
The first half of 2019 witnessed many high-end developments come into the market. About 70% of these developments were located at Cantoments and Airport Residential Area. The table below shows some of the notable high-end developments that came into the market in the first half of 2019. Figure XXXX shows the locations of these high-end developments.
LOOK FOR THE DEVELOPERS IN TABLE BELOW
Name of Development Developer
Nova Devtraco
Henrietta’s Residences Devtraco
Hammond Court Gold Key Properties
Rivonia Heights Rivonia Ghana Limited
Pine Court Whitewall Properties
Platinum Place Platinum Properties Limited
The Signature Capemay Properties
Apartment 24 Imperial Homes
Embassy Gardens Phase C Clifton Homes
Source: (Author,2020)
Figure XXXX: High-end Development Areas in Greater Accra
Source: Broll (Global Property Guide, 2019)
The continuous development of high-end units has led to the rise of house prices. Presently there is a total of more than 4,000 high-end development units located in the prime nodes of Greater Accra with more than 1000 additional units expected to be added by the year 2021.
Mid-end Development Trends
Mid-end housing units are usually constructed in the suburbs at the boundaries of major towns. The cost of land in these areas are relatively low. The demand for mid-end housing is high and is dominated by households unable to afford houses in the high-end market. Sales prices for mid-end units range from $56,000 to $350,000 with rents ranging from $100 to $1000 per month (Broll, 2019). Major developers that construct mid-end housing units include Westhills Ridge Company Limited, Primrose Properties, Devtraco, Regimanuel Grey Limited and Green Sun Limited. Table XXXXX below shows some upcoming notable mid-end developments.
Table XXXX: Anticipated Mid-end Developments For 2020-2022 (CHANGE TO PIC).
Name of Development Type of Unit(s) Bedroom/s Estimated Completion Period Location Developer No. of Units
Ramsar Tower Apartments and Penthouses 1 to 4 3 – 9 months Sakumono Primrose Properties 24
Eden Heights Phase 1 Apartments and Penthouses 2 and 3 18 – 24 months Weija Westhills Ridge Company Limited 850
Bijou Homes Semi-Detached 1 and 2 9 – 24 months Appolonia GHL Bank Limited 2,000
Source: Broll Ghana Research
Average Rental Yield
In Accra the average rent for a four-bedroom executive apartment in a prime location is about US$4,500. This gives a gross rent yield of about 8% to the owner (Frank Knight, 2017).According to a research conducted by Global Research (2019) it was revealed that a 200sqm house would sell for an estimated US$150,000(GHȻ812,250), have an estimated monthly rent of US$750(GHȻ4,061) per month and would give a gross rental yield of between 6% – 8%. A three-bedroom house will typically be rented to expatriates for about US$3,750 – US$5,000 per month.
• In Accra, the capital, rents for two-bedroom houses range from US$300 to US$1,500 per month, depending on location, according to Ghana Investment Promotion Centre (GIPC). At the Airport Residential Area, three-bedroom furnished apartments are rented for US$2,000 to US$5,000 per month.
• In the western port town of Takoradi, three-bedroom homes rent for an average of US$5,000 per month. (PARAPHRASE?????)
About 37.5% of all households in Accra have rented their property. Nationwide, there are 22% rented properties in Ghana. In Accra about 40.4% of households own their houses while 57.4% own houses nationwide. About 20.5% of people in Accra live rent-free representing (19.5% nationwide). Only 1.6% of housing in Accra is employer-provided (4.5% nationwide). In Ghana, gross rental income is pegged at 10%, capital gains tax at 15% and gift tax for property transfer is pegged at 5%.
CONCLUSION
Ghana has a severe affordable housing shortage problem partly due to rapid population growth. In 2010, the total housing stock in rural and urban Ghana was 5.8 million. The population of Accra is currently an estimated 5 million people, a significant increase from the 2.9 million recorded in the 2000 population census (Ghana Statistical Services, 2019).
This is further worsened by the fact that private developers are concentrated on constructing only mid-end and high-end properties. The needs of the low-end market end up falling in the hands of government and quasi-government institutions. Currently, with a shortfall of over 2 million affordable housing units this figure only continues to rise (Business World Ghana, 2017). According to the parliament minority leader Mr Osei Kyeo-Mensah Bonsu, the government is only capable of delivering about 40,000 affordable housing units per year. The government however needs to be able to construct an estimated 110,000 affordable housing units per year in order to effectively tackle the crisis. The current rate of constructing only 40,000 housing units(36% of 110,000) means that there is a constant yearly deficit of about 60,000 to 70,000 housing units every year (Inter Press Services, 2013).
Demand for affordable housing is huge but the country does not have enough supply. Private developers are not venturing into the production of low-cost housing units despite the high potential of the affordable housing market.