Tuesday, 24 October 2017
Housing deficit: No solution any time soon

Housing deficit: No solution any time soon

By Raju J. R. PARWANI, ACCRA
GHANA’S domestic real estate sub-sector is set to witnesscontinues, marginal widening of the housing deficit.
This is because not much has been done by successive governments to narrow the deficit by providing decent and affordable homes for Ghanaians living in urban centres.

Although governments, since independence, have tried to provide affordable housing for the majority of Ghanaians, the country is currently faced with a housing deficit of about 2million units which means 200,000 units must be provided within the next 10 years to bridge the gap.
The shortfall, according to the Ghana Real Estate Developers Association (GREDA), increases by an estimated 150,000 units annually while supply is about 40,000 per year. Thus the shortfall increases by over 110,000 yearly.
The Akufo-Addo led government recently announced the removal of the 5 per cent Value Added Tax (VAT) on real estate sales. Players in the industry have welcome the move and said it will increase sales but the cost of homes still remain quite high for many Ghanaians toafford.
Prices still high
The prices of these estate homes usually start from US$40,000 for single bedroom homes to between US$60,000 and over a US$100,000 for 2-4 bedroom homes.
Many private real estate developers have blamed the sky-rocketing on the volatility of construction input cost. According to the Executive Chairman of RegimanuelGray, Mr Emmanuel Botchwey, “Changes are significant and can range from 15 to 32% of the final cost of building. A house selling for US$65,000 two years ago now goes for US$75,000 because of higher input costs.”
Aside the instability cedi, Mr Botchwey added that there are too many fees and taxes pressuring private developers. “When we build access roads, for example, we are charged a development fee, even if we are doing the government’s job.”
Demand exceeds supply
Demand continues to exceed supply in the housing sub-sector of Ghana real estate sector. On the contrary, commercial real estate abounds in city centres with over 40 per cent of total space vacant at any given time – this is can be seen in neighbourhoods like Ridge, Airport, and Cantonments.
Interestingly, there is an appreciable stock of homes yet to be taken. These are mostlyapartments targeted at the high-end of the market.
Most of these apartments on offer in Accra, usually tagged luxury flats, attract prices between US$70,000 and US$250,000 – a price which is way above the reach of many Ghanaians. Simply put, these apartments are targeted at the top end of the market real estate market and very few are built for the lower middle-income households.
Despite the fact that apartments like the Villaggio Apartments and Polo Heights Apartment Complex are only partly occupied as a result of pricing, apartment developers, whose market target are foreigners descending in their numbers to take advantage of Ghana’s stable economic environment and exceedingly great business opportunities, are still developing more of such buildings.
Minimal government intervention
Decades of efforts by private real estate companies who currently provide over 90 per cent of all new homes in Ghana has immensely helped the situation but pricing has often been out of the reach of many.
This situation can be reversed is government plays a leading role in providing affordable homes to Ghanaians.
The last time government tried was when it signed the STX Housing Projectwith the Koreans. The $10 billion project which would have seen the construction of 200,000 houses was eventually abrogated amidst huge controversy.
Conclusion
In the absence of direct government intervention to close the housing gap, it would be advisable to have government institute strong policies to grow the sector.
A policy should also be put in place to attract Foreign Direct Investments (FDIs) into the real estate sector. This would immensely be of help to many Ghanaians living in urban areas.

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