This 91 percent of Ghanaians are either renting accommodation or living with their nuclear family.

The survey, which was conducted online, had a sample size of over 200 respondents with 89 percent seeking to change their current housing situation.

The majority, forming 64 percent, are looking to own their own apartments and are willing to spend an average amount of GHc 826 per month, describing that amount as affordable.

According to the survey, the lowest amount respondents are willing to spend on a property per month is GHS 50 and the highest is GHS 10,000, proving the term affordability is relative. In the United States, for instance, a property can be defined as affordable when 30 per cent or less of a household’s income is spent on housing.

Ghana’s housing deficit as of July 2013 was estimated to be about 1.7 million houses, according to the Ministry of Water Resources, Works and Housing.

The 2010 Housing Census also indicates that almost a third of Ghanaians do not own a dwelling or pay rent of any kind.

To meet this demand, there needs to be the construction of about 100,000 units annually but that is not being met as only about 40,000 housing units currently are being delivered per annum by the combined resources of the Ghana Real Estate Developers Association (GREDA).

Reasons for housing deficit

Jumia noted that a major reason for the housing deficit is the country’s inability to provide enough affordable housing to meet the needs of the middle class even though certain institutions in the past like the Home Finance Company (HFC Bank) and the Social Security and National Insurance Trust (SSNIT) attempted to provide affordable housing.

Defining affordable housing has been one issue several governments, both past and present, have to grapple with and clearly defining affordable housing is one way of solving this issue.

This survey forms one of Jumia House’s core mandates to research and provide adequate information on the housing sector in Ghana.

Reacting to the results of the survey, the Managing Director of Jumia House Ghana, Akua Nyame-Mensah said, “the survey, though not scientific or extensive provides us with a glimpse of people’s current housing situation. It also gives us an idea of what they may want in terms of housing. We will continue to attempt to provide potential homeowners and renters an opportunity to describe their needs. Understanding demand will enable us to all make better decisions related to what should be built and how to define affordability.”

–

By: Delali Adogla-Bessa/citifmonline.com/Ghana

The post 91% of Ghanaians don’t own property – Survey appeared first on Citi 97.3 FM - Relevant Radio. Always.

With one kid, this young family was thrown out of a house they believed their daughter would grow in and they would not worry about moving from one rented apartment to another.

How did it happen?

The Cedi fell sharply against the dollar, their salaries remained the same and their mortgage repayment which was in dollars grew past their salaries. They couldn’t keep up. Everything came tumbling down!

Ghana’s housing deficit has hit 1.7 million now.

To make it easier to understand, it means spreading it over a 10-year period, a minimum of 170,000 housing units would have to be built annually, according to the Ministry of Water Resources Works and Housing to make sure accommodation in Ghana is no longer a jungle for the survival of the fittest.

It certainly will be a dream to think we can achieve a fraction of this as a country. It won’t happen because the government is busy with something else it considers priority. In fact the scary and ever-increasing housing deficit has never been a priority for many governments over the past 3 decades or so.

As a friend put it, government has been “blowing its dead horns of affordable housing.”

The prices for government’s new State Housing flats at Adenta in Accra is around GH¢300,000 for a 3 bedroom house.

How about that for affordability!

The scary and bitter truth is that, the “vampires” in this unregulated housing industry will suck the vulnerable dry for a very long time to come.

Assuming you acquire a mortgage facility for about GHc240, 000 and a bank gives you a maximum of 80% with an average rate of 29%. Your income should be GH¢14,547.19 to qualify. Down payment for this house is GH¢60,000. How many people can afford this?

Don’t EVER take a dollar mortgage.

In the first quarter of 2015 alone, the Cedi depreciated by about 16% to the US dollar. In the same period last year, it depreciated by over 19%. In the entire 2014, it depreciated by more than 40%.

If you bought a facility for about $80,000 hoping to pay in 20 years, you are looking at a monthly repayment of about $937.36 (40% of net monthly income). The dollar income for this loan amount is about $2,343.15=Ghc8, 903 with an exchange rate of 3.8%. This is only the ideal situation.

With the current depreciation of the Cedi, “Play with the different exchange rates over the period and you will see how worse off the mortgagor will become. The Mortgagor can only be better off if the appreciation rate of his cedi income is perfectly matched with the rate of the cedi depreciation or the appreciation rate of the dollar,” an industry player who pleaded with anonymity said.

This however can never be the case so some banks advise that a component of your income should and must be in USD before you can qualify for a USD mortgage loan.

“Even though we are looking at giving you a place to lay your head, we are also looking at managing risk because the default rate for dollar rate for resident Ghanaians is very high. Foreclosing of properties is not pleasing to the bank. We have had people switching from USD denominated mortgages to Cedis from both externally and internally. It gets quite unbearable for the customer,“ the source noted.

Currently a two bedroom house stuck in the corner of the outskirts of the city will be between $50,000 and $120,000. According to some of these people who are in the industry; they do not even spend a quarter of that amount to build the facility. Add the risk, cost of credit, cost of the land plus litigation, they are still fleecing people but they are desperate to find a decent place to put their families.

The weakening of the Cedi against the US dollar in Ghana is like a weather pattern. It happens every year and the authorities seem to have accepted that it has to happen. The implications on businesses, imports, transportation, even the entire economy seems to be lost on them.

Don’t ever hope that the Cedi will be stable against the dollar for a long period of time. If you buy a house in dollars, in just about two years if you are lucky, the repayment plan will either double or quadruple, depending on how fast the currency falls.

Find a Cedi mortgage

The Cedi mortgage is usually hinged on interest rates. True, interest rates in Ghana are high but it’s certainly better than the dollar which can depreciate by an average of about 20% in just three months.

I have heard people say it is practically impossible to find a cedi mortgage. It is not true! Even some of the mortgage companies offer cedi mortgage but their interest rate is incredibly high too.

But look and ye shall see.

Seek and ye shall find

Reality check

Affordable housing is a mirage. There is a public sector home owner scheme between the Ministry of Finance and a bank, the maximum loan a public sector worker can get is GH¢55,000.  The interest rate for this is subsidized at 15%. Only a handful of developers participate in the delivery of homes matched to this loan amount but they build extremely basic homes.

Cedi interest rates can only go down if the government stops competing with banks for funds in the market. It is killing!

For the future outlook, it would be difficult to project but truth be told, a dollar mortgage is a bad idea, I think.

–

By: Nana Boakye-Yiadom

Email: [email protected]

The post The ‘monster’ in Ghana’s dollar mortgages appeared first on Citi 97.3 FM - Relevant Radio. Always.