• Housing shortage
• Cost of building materials
• Land cost
• High interest rate
• Inflation
• Infrastructure development
• High import duties
• Expensive building permits
• Foreign and diasporans investments

While there are so many factors that plays a role in the high prices of real estate in Ghana, it could sound cheap to individuals coming from countries where there is high salaries and purchasing power. Are you homes expensive in Ghana? Yes and no. If you live in the west, or if you are a foreigner moving to Ghana, homes are pretty affordable compare to home prices in the west. Hold your breath for a moment and let me explain. For the sake of arguments, let’s say you reside in the US, the median home prices   per state cant be compared to Ghana.

Let me take this further. How many Ghanaians earn $1000 in cedi equivalent it is around 12,000 GHC a month?  According wagesindicator minimum wages in Ghana is  13.53 cedis to 14.88 cedis. If you ever wondered why government affordable programs is feasible to ordinary Ghanaian, here is why. According State Housing Company, 60% of Ghanaians can’t afford homes without government support. Only 5% of the population can afford to buy their own homes without the government support and the 35% of the population at the bottom will never be able to afford their homes regardless. The Seglami housing project  has become a ghost town because people can’t afford the so called affordable housing. It may sound cheap but again it is not affordable for majority. Ask any Ghanaian. According salary explorer, average salary range from 1280GHC and high salary earners range from 5000GHC to 22,600GHC maximum. Below shows affordable housing pricing by State Housing company but how many Ghanaians can afford it?

Unit Type	Price
Studio	$12,000
1 Bedroom	$18,000
2 Bedroom	$30,000
3 Bedroom	$37,000

Source: State housing company

 

 

We often that Angola is one of the most expensive countries to live in terms of housing. This is due to the fact the fact that building materials are imported and they are not exception, Ghana almost All African countries included. And as you know you can’t be in business without profit, developers factoring the cost and their return on their investment shot the prices to the roof for an average person with salary around 140 per month to be able to afford.

Now, let’s delve into the factors one-by-one that influences pricing of homes. The interplay of these factors continues to shape the housing market in Ghana, influencing accessibility, affordability, and the overall dynamics of the real estate sector in the country. Ready? Let’s get to it.

 

 

Housing Shortage

 

Ghana faces a severe 1.8million shortage of housing, particularly in urban areas. The rapid population growth, combined with a significant influx of rural-to-urban migration, has strained the available housing stock. While the demand for housing continues to rise, the construction of new homes has not kept pace. This scarcity drives up property values and rents, making homeownership and renting expensive, particularly for lower and middle-income earners. It is kind of demand and supply dynamic.

Read also: Why are Rents So Expensive in Ghana, Accra? -Villashark.com

High Cost of building Materials

 

Also we produce cement such as Ghacem, Dagote cement locally in the continent, manufacturers still import components which courses cement prices to increase almost every month if not a week. The cost of other building materials in Ghana is notably high due to several factors. Firstly, there is a heavy reliance on imported materials, which are subject to import duties, taxes, and transportation costs, significantly inflating their prices. Additionally, the limited local production of materials results in a dependence on imports, leading to increased costs. Tiles, steel, and other crucial building materials are often imported, adding to the overall expense of constructing homes. Moreover, fluctuations in global commodity prices impact the cost of these materials in the local market. The lack of locally produced alternatives and the absence of economies of scale in production contribute to the high cost of construction materials, making housing more expensive. Most uncompleted houses for sale in Accra is as a result of cost overrun and the developer couldn’t continue but just want to cut his losses.

 

Land Costs

 

If you are embarking on building your home or project you had to get one thing right to beat the cost and that is the land. The cost of land for sale in Ghana, especially in urban and prime areas, has seen a substantial increase over the years. If you ask me how much is land in Ghana in US dollars? Average price per plot range from $50,000 to $350,000 or more depending on the location.

The surge in land prices is primarily due to high demand driven by rapid urbanization, population growth, and speculation. Urban areas, where economic activities are concentrated, have experienced the most significant price hikes, with investors, developers, and speculators buying land for future projects or resale. As a result, the cost of land for residential development has skyrocketed, directly impacting the overall cost of building homes. The scarcity of available land in well-serviced areas also contributes to the high prices, as developers often need to pay a premium to acquire suitable land for construction. This trend further compounds the issue of affordable housing, making it more challenging for the average citizen to purchase or build a home in desirable locations.

Read also: BEST AREAS TO BUY CHEAP PLOTS OF LAND IN ACCRA

Interest Rates on Mortgages

 

Banks in Ghana are not helping the situation. You don’t want to borrow from banks for development. High-interest rates on mortgages in Ghana significantly impact the affordability of homeownership. The prevailing lending rates set by financial institutions make it challenging for individuals to access loans for purchasing or constructing homes. The high cost of borrowing limits the number of people who can afford to take out mortgages, constraining the demand for homes. Moreover, the stringent conditions attached to mortgages, including 20% to 30% down payment requirements and short repayment periods, further restrict access to housing finance for many Ghanaians. As a result, even those who can afford monthly mortgage payments find it difficult to meet the initial financial obligations required to secure a mortgage, pushing them away from homeownership.

 

Inflation

 

Inflation in Ghana plays a significant role in driving up the cost of living, including the cost of housing. Rising inflation impacts the prices of goods and services, including construction materials, labor, and operational costs for developers and contractors. This upward pressure on costs makes building homes more expensive, as builders and developers pass these increased expenses on to homebuyers. Also, inflation erodes the purchasing power of individuals, making it harder for them to save for down payments or qualify for larger mortgage amounts, thereby influencing the demand for housing and contributing to the overall cost of homes.

Read also:WHY THE DIASPORA INVEST IN GHANA REAL ESTATE

 

Infrastructure Development

 

Investments in infrastructure, including improved roads, utilities, and public amenities, are essential for socio-economic development. However, these developments can inadvertently impact property values and housing costs. Enhancements in infrastructure, such as better transportation networks or the establishment of commercial hubs, tend to increase the attractiveness of certain areas, subsequently raising property values. While this is positive for the overall development of the region, it also contributes to escalating housing costs in those particular zones. As the desirability of an area increases due to improved infrastructure, the demand for housing grows, thereby causing an upsurge in property prices. To give you are an example, lands prices before Pokuasi interchange project started was cheap, after the completion of the interchange the prices of land at Pokuasi has tripled.

 Read also: Best Booming Areas and Cities for Luxury Real Estate in Ghana

Import Duties

 

Government policies and taxation significantly impact the cost of constructing homes in Ghana. The imposition of taxes, such as the Value Added Tax (VAT) and import duties on building materials, directly adds to the cost of building. The 50% VAT on imported goods, as well as other taxes and levies, inflates the prices of crucial construction materials. This affects both developers and potential homeowners, as the increased costs incurred by developers are typically passed on to property buyers in the form of higher house prices.

 

Expensive Building Permits

Building permit doesn’t come cheap. Obtaining permits and meeting regulatory standards often involve lengthy processes, leading to delays and increased costs in development projects. The time-consuming nature of bureaucratic procedures and the complexity of compliance  contribute to added expenses for developers. Our gated community coming up is costing us over $200,000 just for building permits. Of course this cost is factored in our pricing of homes which consequently, elevated housing prices.

 

Foreign and Diasporans Investment

 

Ghana has seen increased interest from foreign investors, expatriates and Ghanaians in the diaspora seeking to invest in or own property in the country. And as you know they have purchasing power compare to most locals. Most million dollar homes sold in prime areas like Cantonments, Airport residential, East Legion etc, are bought by these individuals.

The attraction often lies in the potential returns on investment, and the growing real estate market. This external demand, especially for prime properties, leads to increased competition and higher property values in those areas. These makes housing less affordable for the local population, particularly in sought-after locations.

 

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Are you a foreigner considering investing in Ghana’s real estate market? Or are you African diaspora planning to buy your dream home in Accra, Ghana? We would love to connect and serve you. Buying your dream home in a new development project by a real estate developer gives you flexibility with regard to payment plans to choose from. You don’t have to go through all that stress to get building permits and regulations checked. We have done all the hard work.  Your only job is to own it by reserving your home now. Get in touch with us today, tomorrow might be too late.

 

 

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