Addressing Ghana's Housing Crisis: Challenges, Prospects, and Innovative Solutions

A report by the Centre for Affordable Housing Finance Africa highlights the severe housing deficit in Ghana, standing at 1.8 million units. Despite efforts from both the public and private sectors, the country's mortgage market remains underdeveloped, with high-interest rates and no secondary mortgage market.

As of April 2023, the average commercial lending rate was 31.66%. Major mortgage providers like First National Bank (FNB), Republic Bank Limited, and Fidelity Bank offer both US dollar and Ghana cedi-denominated mortgages.

However, due to the cedi's instability against the US dollar, most providers favour US$-denominated mortgages at lower rates (13.5% for US$ loans compared to 29.8% for GHS loans by FNB).

Mortgage providers typically allow loan-to-value (LTV) ratios of 80%, with repayment periods ranging from 15 to 20 years. The high non-performing loan (NPL) ratio in the construction sector, at 32.8% as of June 2023, reflects broader economic challenges impacting housing finance, as detailed in the report.

Housing Affordability and Supply
The report notes that affordable housing remains a significant issue in Ghana. The average income is GH¢2,828 (US$257) per month, leaving most households with limited surplus income after expenses.

The high cost of construction materials, which are largely imported, exacerbates the affordability problem. The price for a newly constructed two-bedroom house starts at GH¢400,000 (US$36,430).

Government initiatives like the National Homeownership Fund (NHF) and the National Mortgage Scheme (NMS) aim to provide lower-interest mortgages and support for developers. Despite these efforts, affordability remains elusive for many, with vacant housing units increasing from 6% in 2010 to 12.7% in 2021 due to high rental prices, as highlighted in the report.

Innovative Housing Projects
The Lahagu Affordable Housing Project, developed by Reall and Afreh Group, presents a promising model for addressing housing needs.

The report by the Centre for Affordable Housing Finance Africa highlights this project, which uses a cost-effective construction method involving removable, reusable plastic formwork moulds filled with sandcrete materials. The project aims to expand access to green, resilient, and affordable housing at scale. This innovative approach not only reduces construction costs but also promotes sustainability.

Policy and Legislative Support
The Ghanaian government has introduced several policies to support housing development, as outlined in the report. The Revised National Affordable Housing Program, a public-private partnership, provides subsidies to developers and sets price ceilings for housing units. Additionally, the government is establishing a national housing authority to oversee housing programs and policies.

Efforts are also underway to streamline the land registration process and enhance tenure security. The proposed blockchain framework for land acquisition could eliminate the need for traditional land certificates, reducing disputes and corruption, as noted in the report.

Conclusion
Addressing Ghana's housing crisis requires a multi-faceted approach involving financial reform, innovative construction methods, and supportive government policies.

While challenges remain, projects like the Lahagu Affordable Housing Project offer hope for scalable, sustainable solutions.

Continued efforts to enhance affordability and access to housing finance are crucial to meet the growing demand and reduce the housing deficit in Ghana, as emphasized in the report by the Centre for Affordable Housing Finance Africa.

The writer, Joycelyn Kyei-Baffuor is a journalist.