The President of the Ghana Real Estate Development Association, Mr Patrick Ebo Bonful has
said that the real estate sector in Ghana, which has experienced remarkable growth over the past
two decades, is now facing unprecedented challenges amidst the current economic crisis.
Speaking at the Ghana Housing Awards in the UK, he stated that despite achieving a growth rate
of 22% in 2020-2021, the sector is grappling with weak GDP growth, deteriorating balance of
payment, high inflation, and a depreciating local currency.
”In recent years, the real estate sector has played a vital role in Ghana’s economy. According to
the Oxford Business Group, the sector contributed nearly GHS11bn ($1.9bn) or 2.9% to the
country’s GDP in 2020, up from GHS9bn ($1.5bn) or 2.5% in 2019. This impressive growth has
been sustained since 2013, despite challenges posed by the Covid-19 pandemic and global oil
price fluctuations that affect Ghana’s economy.”, he stated.
He futher indicated that the Covid-19 pandemic has had varying impacts on different sub-sectors
of the real estate industry in Ghana.
Adding that the sector managed to weather the storm with fewer negative consequences than
expected and began to experience a rebound in 2021-2022.
”Nevertheless, the current economic situation presents a new and formidable challenge that could
undermine the progress made over the past two decades.
One of the immediate effects of the economic crisis is the impact on property prices. Although
listing real estate properties in foreign currency is prohibited by law, real estate sale and rental
prices are often quoted in US dollars. As a result, any depreciation of the Ghanaian Cedi leads to
higher prices in local currency terms, making the market highly vulnerable. The real estate sector
has relied on increased activity in the mid- to high-end property markets, driven by the
expanding middle class, a robust tourism sector, and corporate demand. However, a depreciating
Cedi negatively affects the purchasing power of all buyer classes and is likely to hamper the
short- to medium-term growth of the sector”, he stated.
The GREDA President noted that despite efforts to develop a mortgage sector, the mortgage-to-
GDP ratio stood at a mere 0.5% in 2020, with the secondary market virtually non-existent.
“Additionally, only 0.8% of homeowners in Ghana funded their purchases with mortgage
products, preferring personal loans and alternative financing options. The current economic
crisis, characterized by high interest rates, inflation, and a depreciating Cedi, is expected to
further diminish the already limited mortgage sector. Banks are likely to tighten lending
requirements, demand higher interest rates, and reduce financing, negatively impacting both
buyers’ and tenants’ demand. This, in turn, will hinder developers’ ability to construct new
properties and complete ongoing projects.” he added.
“‘The economic crisis also poses a threat to the plans for affordable housing in Ghana. Currently,
a 2-bedroom residential property priced between GHS100,000 ($17,100) and GHS200,000
($34,200) is considered affordable. However, to meet the demand, the annual housing supply of
35,000 to 40,000 units must be more than doubled to reach the target of 100,000 units per year.
The Public Private Partnership (PPP) Act of 2020 and existing partnerships have facilitated
collaborations to provide affordable housing. Nevertheless, the deepening economic crisis will
likely affect such collaborations, as government resources dwindle, and the private sector faces
financing challenges, resulting in temporary shelving of projects”, he stated.
Looking ahead to 2024 and beyond, he said Ghana’s current economic crisis is expected to
persist, with the austerity program undertaken as part of the $3 billion IMF bailout package
taking a toll.