Excerpt from Africa Housing Finance Yearbook 2015


The past two decades have seen Ghana experiencing strong and inclusive growth. The country has out-performed regional peers in reducing poverty and improving social indicators. This led to high volumes of direct foreign investments (DFI) within the period.

However, due to the government’s excessive borrowing short-term vulnerabilities have risen significantly amid high fiscal and current account deficits to the extent that the current debt burden of the nation has risen to approximately GHC98.6 billion (US$25.2 billion). The country’s international reserve position has weakened alongside mounting public debt. High interest rates and a depreciating currency have begun to weaken private sector activity. Economic growth has slowed with the current GDP rate of 38.65 percent at the end of June 2015 from 48.59 percent as at January 2015 and inflation rate of 17.9 percent as of July 2015.

There is a general economic activity slowdown which has been exacerbated by the current perennial energy crisis combined with high costs of fuel products to provide power which has virtually collapsed most home-grown Ghanaian businesses such as hair dressers,

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Excerpt from Africa Housing Finance Yearbook 2015


The past two decades have seen Ghana experiencing strong and inclusive growth. The country has out-performed regional peers in reducing poverty and improving social indicators. This led to high volumes of direct foreign investments (DFI) within the period.

However, due to the government’s excessive borrowing short-term vulnerabilities have risen significantly amid high fiscal and current account deficits to the extent that the current debt burden of the nation has risen to approximately GHC98.6 billion (US$25.2 billion). The country’s international reserve position has weakened alongside mounting public debt. High interest rates and a depreciating currency have begun to weaken private sector activity. Economic growth has slowed with the current GDP rate of 38.65 percent at the end of June 2015 from 48.59 percent as at January 2015 and inflation rate of 17.9 percent as of July 2015.

There is a general economic activity slowdown which has been exacerbated by the current perennial energy crisis combined with high costs of fuel products to provide power which has virtually collapsed most home-grown Ghanaian businesses such as hair dressers, carpenters, welders, some microfinance businesses and most SMEs which heavily depend on constant supply of electricity to do business.

In March 2015, Moody’s downgraded the country’s sovereign rating for the second time from B2 to B3 due mainly to the country’s deteriorating debt burden and large fiscal imbalances and a sharp weakening of the Cedi. However, with the recent positive review by the IMF, a partial bond guarantees by the World Bank and the resumption of donor support the country’s currency, the Cedi gained some ground against other major currencies within the past two months.

Access to Finance

Over the past years, Ghana’s financial system has undergone intensive regulatory reform and restructuring that resulted in an increase in credit offered by commercial banks until recently when there was an acute credit crunch in the economy. This recent phenomenon has resulted in the financial institutions curtailing the amount of credit they offer which includes the amount of credit offered for the purchase of residential properties. Some of the banks are currently foreclosing on real estate developers who were given construction finance to develop properties that are left unsold. The financial sector has 26 commercial banks, 443 microfinance institutions and three credit bureaus (XDS Data, Hudson Price and Dun and Bradstreet). Out of the 26 commercial banks, only seven are listed on the Ghana Stock Exchange. According to the World Bank’s 2015 Doing Business Report, in the ‘ease of getting credit’ category, Ghana is ranked 36th out of 189 countries. In 2012, the World Bank launched the Global Financial Inclusion Database (Global Findex) to explore levels of financial inclusion around the world. According to Global Findex, the use of credit is fairly common – 39.2 percent of adults over 25 years of age report that they had a loan. Currently in 2015, very few Ghanaians have an outstanding loan to purchase a home: 1.9 percent of the top 60 percent of income earners and 3.1 percent of the bottom 40 percent of income earners.

Only five of Ghana’s 26 banks officially offer mortgage loans as a product (namely HFC Bank, Fidelity Bank, CalBank, Stanbic Bank and UT Bank which grants mortgage on a limited basis to customers of its subsidiary UT Properties), in addition, to Ghana Home Loans (GHL) which is the country’s only residential mortgage lender. Less than three percent of loans granted by banks in Ghana go into housing finance. Most banks neglect the home loans market and focus instead on short-term lending and investment such as risk-free government bonds and trade finance that offers higher returns while consuming less capital. The total home loans book in Ghana is in excess of US$200 million and the number of borrowers just under 6 000. Ghana’s housing finance system (as a share of GDP) is 0.5 percent compared with the African average of 15.7 percent of GDP, making it one of the lowest in the world.

Though some of the major banks have more than the required capital, they still do not finance mortgage loans due to the long tenor of between 10 to 20 years to recoup their investment. HFC bank, which is a major provider of mortgage loans in Ghana, has managed to increase its capital (total equity) from GH¢32 million in 2009 to GH¢95.4 million in December 2014. Assuming that HFC Bank will use all its equity to grant mortgage loans for the purchasing of an average house with the price of GH¢140 000 (US$35 897), it could give mortgage loans to purchase only about 681 houses. HFC is the only bank that has used the stock exchange to raise funds for mortgage lending by issuing and listing six corporate bonds since 1996.

Each of the five banks and GHL offers various mortgage loan products, which can all be categorised into four main loan categories. The first is the Home Purchase Mortgage, which is used for purchasing new houses. The borrower is expected to make a minimum 20 percent down payment of the cost of the property, while the bank provides a loan of 80 percent to cover the purchase price of the property. The loan term is for 20 years, and the interest rates are always variable for the Cedi mortgage loans which range between 27 percent and 32 percent among the various banks (there are also US dollar denominated mortgage loans which carry fixed interest rates between 12.5 percent and 14 percent among the various banks). The second product is the Home Improvement Mortgage, which is for renovation of already acquired property. These types of mortgage usually carry a term of five years. Another product is the Home Completion Mortgage, which is used to complete a house under construction. The last product is the Home Equity Mortgage, is used for realising equity locked up in a property. The Home Purchase Mortgage dominates the market.

Pricing for mortgage loans is in either the local currency (the Cedi) or US Dollars. US dollar loans are mostly given to Ghanaians in diaspora and resident Ghanaians who earn their incomes in US dollars. Everyone else is given a Cedi loan. There are also variations in the interest rates charged for both categories. While interest rate on Cedi loans varies by 30 percent, that of dollar loans is fixed between 12.5 to 14 percent (dependent on the lender). This is done to insulate the mortgage bankers from exchange rate risk when they have to pay back on their borrowings in US dollars from foreign sources.

In Ghana, mortgage loan providers are faced with many challenges such as insufficient property supplies due to lack of adequate construction financing from the banking sector to the real estate developers, the financial institutions have underwriting techniques but the lack of well-developed and resourced credit reporting systems. The financial institutions are expected to report all of their credit data to all three bureaus; the institutions do not frequently report such data to the bureaus for them to update their records. It therefore becomes very difficult to do a sophisticated underwriting to properly qualify applicants due to lack of updated records of applicants’ credit transactions with other financial institutions. There are also acute delays in title registration of documents from the Land Title Registry and there is no reliable database for vital personal information such as date of birth and residential address. Further, there is no proper address system (the street naming and property numbering address system just started in the last quarter of 2014) making it very difficult to establish the credit worthiness of potential borrowers. There are also difficulties with collateral enforcement. Even where people have standard property that can be used for collateral, land registration systems in Ghana lack regulation such that most people have no documents to prove ownership of their property.

In April 2010 USAID launched and funded a housing microfinance pilot program with Opportunity International, USA, International Land Systems and Sinapi Aba Trust. This program provided         US$1 million funding to Opportunity International, USA for disbursement to Sinapi Aba and International Land Systems to promote housing microfinance within the Ashanti and Brong Ahafo regions for two years. International Land Systems provided site plans for the recipients and Sinapi Aba provided housing microfinance loans. After the success of this program Sinapi Aba has sourced its own funding to continue the program.

In late 2012, the MasterCard Foundation and Habitat for Humanity International, Ghana, jointly launched a five-year pilot project in Ghana to promote the growth of the housing microfinance and incremental housing construction. The US$2.2 million initiative engaged with three microfinance companies in Ghana (Sinapi Aba Savings and Loan, Unicredit and Opportunity International Savings and Loan) to provide technical support in the development of housing microloan products. This program ended in June 2015, with the exception of Sinapi Aba the other two companies did not capitalise on the technical support and cited lack of funding to continue the program so the 20 000 housing microloans to low income earners in mostly the rural areas was never achieved.

Global Access Savings and Loan offers housing microfinance loans to low income earners in both urban and rural Ashanti region. Mortgage lenders, such as Ghana Home Loans, have reported that despite the difficult operating terrain, the demand for home loans is very strong and most borrowers are firmly committed to meeting their loan obligations. Growth in the housing sector has put pressure on mortgage lenders who have struggled to raise funding to meet the demand. Furthermore, the mortgage loans market environment has recently seen signs of significant improvement. These include the introduction of credit bureaus that give lenders access to the credit history of borrowers within seconds; most banks and other financial institutions feel very reluctant to update the bureaus with credit activities on their customers and this makes it difficult to determine the true credit worthiness of borrowers.

In 2012, Ghana Union Assurance launched the first collateral policy to provide cover to finance houses on construction. The Collateral Replacement Indemnity (CRI) targets borrowers in the lower to middle income mortgage market (with incomes below GH¢4 400, or US$1 128) who do not have the deposit required by mortgage lenders, but who have the capacity to pay if the debt is spread over a period of time. Working with the support of Home Finance Guarantors Africa Reinsurance Limited, the CRI enables borrowers to access a 100 percent loan.

Finally, the development of a secondary property market in Ghana will be required to fuel the growth of the home loans market and enable home loans to achieve scale. In addition, there is an appetite for the development of a Real Estate Investment Trust (REIT) market.

Ghana Home Loans (GHL) in July 2013 hosted a mortgage backed security conference in Accra to solicit investor confidence with a view to launching a mortgage backed security in the first quarter of 2014 to raise US$20 million with a tenor of 5 years at the rate of 7 percent with a semi-annual principal and interest payments. This initiative was delayed by regulatory issues but have since been resolved and GHL has made a shelve registration of US$100 million and will issue the first tranche of US$20 million of this initiative by the first quarter of 2016.


Most formal housing units are beyond the affordability level of majority of the population. Analysts have indicated that only three percent of households can afford monthly mortgage payments. ASN Properties currently has the cheapest house (2 bedrooms) on the market on a 40 m2 plot and costs GHC95 000 (US$24 297). This is a basic house with no kitchen cabinets, floor tiles or wardrobes. For a house of this size, the monthly mortgage payment will be about GHC955 (US$245), after making a 20 percent deposit of GHC17 400 (US$4 600) in order to obtain the mortgage and require that the prospective mortgagor be earning about GHC2 387 (US$612) a month to qualify. The range of salaries is from a minimum of GHC600 ($153) to GHC10 000 (U$2 564) a month. This puts majority of formally employed households out of the reach of the housing market.

The minimum required mortgage down payments across all mortgage providers is 20 percent of the purchase price of the property to be purchased. This could be quite high for most households who do not have the required amount of savings because of low incomes and the very high cost of living. Most real estate developers like Devtraco, Regimanuel Gray, Comet Properties have houses already built with no buyers.

Most households who cannot afford a mortgage engage the developers and make tranches of progress payments of equal percent after a formal contract has been executed (this is arranged between the developer and customer) with the final payment being made for the completion of the property.

In urban areas, renting is the most common form of accommodation. However, constraints in supply have led to exploitative practices by landlords, who demand two to three years in advance rental payments. As a result, households who cannot afford these high upfront payments end up overcrowded housing. According to the 2010 national census, almost one third of Ghanaians do not own a dwelling or pay rent of any kind. A CHF study undertaken in Accra in 2010 found over 3 000 people sleeping outside in an area less than one fifth of a km2.

In addition, land and construction materials are expensive, as much as 80 percent of building materials are imported. Money spent on building the necessary infrastructure, even for modest homes can cost around US$300 per ft2. Therefore, in the face of payment flexibility in this sector, the relatively low home ownership rate of 27-32 percent underscores the problem of housing affordability. In 2015, a standard 50kg bag of cement cost GHC33 (US$8.46), while a standard sheet of corrugated iron for roofing cost GHC23 ($5.90) (1.117×2.438, width – 0.4 mm).

Housing supply

The Ministry of Water Resources Works and Housing in July 2013 estimated the current housing deficit in Ghana to be about 1.7 million houses. The annual housing demand of about 100,000 units is not being met, with only about 40,000 housing units currently being delivered per annum by the combined resources of the Ghana Real Estate Developers Association (GREDA).

As much as 90 percent of Ghana’s housing stock is produced between home owners who have already acquired land and small scale contractors. By adopting these strategies of incremental building, completion times range from 5 to 15 years.

The main players in the housing delivery market in Ghana are GREDA. This body currently delivers about 40 percent of the nation’s housing requirements but they are mostly concentrated in three urban areas: Greater Accra, Kumasi and Takoradi. There are about 400 registered members with just about 150 who are actively delivering quality houses in the range of GHC215 000 (US$55 000) to GHC1 170 000 (US$300 000). This association has both local and foreign developers as its members. This also includes government players as Tema Development Corporation and State Housing Company (SHC). Some members of the association such as Devtraco, Taysec, Trassacco, Regimanuel also produce houses for the upscale market from a minimum of US$300 000 to US$1 million.

Provision of infrastructure also adds to the cost of property. Real Estate Developers have to provide electricity transformers, poles, cables, water and road networks to their construction sites which increases construction costs and after 24 hours, these materials become the property of the government.

Despite the enormous demand for housing, a recent debate in parliament noted that unfinished developments are visibly evident in urban areas. In 2012, a high profile development being driven by the government and a Korean construction firm STX, which promised the delivery of 200 000 units, fell through due to difficulties in contracting arrangements. Recently, a Brazilian firm announced the intention to construct 5 000 affordable houses, and in February 2014, the Moroccan construction company, the Addoha group, committed to constructing 10 000 affordable housing units in Ghana. With the exception of the Brazilian firm whose buildings are at various stages of completion, none of the other developments have materialised

Slum Dwellers International (SDI) has partnered with the Ghana Homeless People’s Federation to find solutions towards improving human settlements and shelter conditions. Two projects, Amui Dzor Housing project was completed in 2013 and the City Wide Slum Upgrading Project is yet to be completed. The Amui Dzor Housing project which is a collaboration with UN-Habitat’s Slum Upgrading Facility and the Ministry of Water Resources Works and Housing as well as the Ashiaman Municipal Assembly consists of 32 residential accommodations, 15 stores for rental, six toilet and six shower facilities that are rented to the public on a daily basis.

Working with People’s Dialogue on Human Settlements, these Ghanaian partners have focused on Land, Services and Citizenship (LSC) programme—a three-year project targeting mobilisation of savings groups, community infrastructure, profiling, mapping and organisation of city wide forums. Under the first phase of LSC 18 slum settlements have been mapped and profiled in two cities and a memorandum of understanding signed with Ashaiman Municipal Assembly. A Project Implementation Team has been set to jointly oversee the implementation of project activities. The Municipal Assembly provide technical assistance to anchor the profiling and mapping activities. Funded in part by UN-Habitat, the project is driven by the Ministry of Local Government, and two municipalities, Tema and Ashiaman. UN-Habitat provided a grant of US$400 000 as a capital enhancement, and a further US$100 000 for administration and development.  An additional    US$400 000 capital enhancement grant is expected to undertake the second phase of the project.

Property markets

Most Ghanaians buy land for the purpose of constructing a building, a house, or developing a farm. However, cultural traditions tend to look down upon the idea of selling of property. The real estate market in Ghana has not been fully realised as majority of the population tend to buy land with the purpose of developing their own homes. The real estate market however is growing as the younger generation of Ghanaians realize the capital gains made from property is a quick path to wealth in periods of rapid inflation.

In the past, government supported the development of the GREDA, whose members have constructed over 1 000 000 new homes since their formation in 1988. However, GREDA is a land and housing developer organisation and is not in the business of offering real estate services for existing housing stock. There are many people operating as estate agents, many of whom have no formal or professional training.

According to the World Bank’s 2015 Doing Business Report, registering property in Ghana requires five procedures, takes 46 days and costs 1.1 percent of the property value. Ghana was ranked 96th of 189 countries for this indicator in 2015. The capacity to register a property remains limited to major centres – Accra, Kumasi, Takoradi and a few smaller towns – and the process through the Lands Commission remains quite manual and is fraught with administrative limitations. Furthermore, the land tenure system contributes to the property ownership crisis. Lands are owned by traditional rulers and families. Members of GREDA face a lot of challenges in their efforts to deliver houses to the population. Some of these constraints are land acquisition where in Ghana almost all land is vested in the traditional authorities; developers sometimes have to acquire their land from several sections of the same traditional authority.

The growth of the oil and gas industry has brought some up market developers into the market that are developing highly priced condominiums and other high rise developments in the city centers, most of who sell off-plan with their prices ranging from between US$300 000 to more than US$1 million. Property rentals in the middle to upper sector range between US$2 500 and US$8 000 a month.The real growth of the property market is in the low to middle income bracket where the price of properties range from between GHC97 500 (US$25 000) to GHC585 000 (US$150 000) and most developers sell off-plan.

Both HFC Bank and GHL have established subsidiaries to capitalize upon and facilitate the growing residential property market. HFC Realty is wholly owned by HFC Bank Ghana, and began operations in 2006 with a mission to hold, develop and manage real estate in the country. It operates as a developer, property manager, valuer and real estate broker in the industry. GHL established the online Ghana Home Loans Online Realty, an online database of properties available in the Ghanaian market.

Policy and regulation

The Borrowers and Lenders Act of 2008 and the Central Securities Depository Act of 2007 are two pieces of legislation that were enacted to speed up the foreclosure process (from 18 months to 90 days) and to allow for the immediate online registration of collateral at the Bank of Ghana.

Housing in the country has never been a significant component of national economic planning, but has been seen rather as part of its welfare sector. In 2014 a national housing policy was drafted by the Ministry of Water Resources, Works and Housing. The policy focuses on six thematic areas: a national housing vision, goals and objectives; land for housing, housing finance, housing design and construction; institutional reforms; and a housing governance. This housing policy takes the same form as previous ones enacted for example, provision of tax holidays and financial guarantees for real estate developers or zero tax on equipment and machinery imported for housing construction. However this new housing policy document failed to address the lack of incentives such as mortgage tax relief or first-time home purchase subsidies.

In 2012, the Ghana Housing Finance Association started work with stakeholders to draft a Condominium Property Bill to govern the development of units for ownership, constructed in buildings rather than free standing on plots. This condominium property bill sets out the requirements for management of common areas and the title definitions for ownership. This document has been finalised and presented to the Ministry of Water Resources Works and Housing for onward presentation to Cabinet for deliberations before it is presented to parliament for passage. As at the end of August 2015, this bill is yet to be presented to cabinet.


The opportunities in the Ghanaian housing sector look very prosperous. With the discovery of oil and gas, the sector has opened up the housing industry to many Ghanaian and foreign investors. The Chinese, the Moroccans, the Brazilians and others are taking advantage of the prospects and are constructing large sections of houses for sale. The Chinese are constructing two 13 storey high rise condominiums in the heart of Accra. The first one consists of 60 units with 12 three bedrooms, 15 two bedrooms and 33 one bedrooms. The second consists of 30 units of 15 one bedrooms and 15 two bedrooms each.

There is however the need for the banking sector to provide long-term construction finance to aid the local real estate developers to produce more units for the low to middle income earners where there is the bulk of the housing demand. With greater awareness, access and acceptance of mortgage products in the country and finalisation of reforms to the land administration system, the mortgage industry can thrive and allow room for additional mortgage bankers. With the exception of Global Access Savings and Loan and Sinapi Aba Savings and Loan, no other institution is providing housing microfinance to the rural low income earners and this is an area that more players are needed to help individuals in the rural areas to improve on their housing needs.



HFC Bank 2014 Annual Report

Ghana Statistical Services

Bank of Ghana (Monetary Policy Committee Meeting, June 2015)

Ghana Sovereign Rating Website

HFC Bank ( Annual Report 2014)

Ghana Home Loans

Asamoah et al







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