Ghana Real Estate Price Bubble: Will It Burst?

With the American housing market just beginning to rebound from inflated property values and a subsequent crash, the question on many people’s mind is, “will the rapidly increasing Ghana real estate prices experience a similar burst in the near future?” To answer this question, we must look at some of the economic factors that influence real estate prices.

Microeconomic Factors

The personal income level of Ghanaians has risen enough recently that the country’s socioeconomic status has been upgraded from low-income to lower middle-income. Many residents who couldn’t afford a home of their own in the past now can. The demand for existing homes is high; but the supply is low. The 2000 Population and Housing Census estimates 2.3 million new homes will be built by 2025 to keep up with the demand.

Macroeconomic Factors

The construction of new homes helped to boost the GDP of Ghana by 14.4 percent in 2011. By comparison, the Bureau of Economic Analysis reports that the United States GDP slowed in 2011, increasing by only 1.8 percent.

Other factors that influence housing prices include:

• Demographic trends
• Urbanization
• Increases in credit
• International interest rates
• International demand

The rapid urbanization of metropolises such as Accra, Tema and Kumasi are driving housing prices up in those areas, yet increases in credit are enabling Ghanaians to keep up with the purchase prices. One of the key differences between the increase of credit in Ghana and that of America experienced just before the real estate bubble burst is the lending standards are stricter. In most cases, you must have a down payment of at least 20 percent to qualify for a mortgage in Ghana; Americans were buying homes with little to no money down prior to the bust.

Improved access to low-interest mortgages has also made real estate in Ghana a desirable to foreign investors. Even if large global economies such as America were to experience another recession, Ghana’s economy is not dependent solely on foreign investments, tourism or other income from those countries.

Outlook

The real estate market in Ghana is expected to remain healthy for years to come. The country has shown exemplary signs of economic growth and political stability over the past 25 years. The demand for housing stems from the country’s own flourishing economy and rising income levels, not international demand. That, in combination with increases in credit, makes the market strong and favorable.

Invest in Ghana now! Contact Ghana Homes Group for a free consultation.

Electricity Blackout Problems in Ghana...

...Read below how it can affect your lifestyle and how to plan when building a home in Ghana.

The rapid growth in Ghana has caused a problem with the demand of electricity. Rolling blackouts have been occurring on a regular basis from load shedding, the West Africa Gas Pipeline Company cannot supply enough gas to meet the demand, and system failures have also plagued the country. While going without power for a few hours once in a while is tolerable, it becomes very aggravating when it happens day after day, month after month.

The Problem

In 2012, the population of Ghana increased by 1.79 percent. Over the past 6 years the growth rate has hovered around 1.9 percent. This combined with increasing personal income levels has led to a construction boom in Ghana. This is putting a strain on the existing infrastructure and causing blackouts.
Power outages can disrupt everyday life in a number of ways ranging from minor annoyances to major problems. If your home lacks sources of natural light, you might not be able to see without a candle or flashlight even in the middle of the day. You might not be able to cook dinner or complete your work assignments as needed. Or worse yet, If you rely on electricity to power medical equipment the consequences can be life threatening.

The Solution

The government is working with the Electric Company of Ghana as well as other entities in an effort improve the infrastructure and add approximately 3,000 additional Mega Watts to the country’s power grid by 2015. Kweku Awotwi, CEO of Volta River Authority said that the electricity supply has increased between 10 and 11 percent over the past two years and oil production is expected to increase even more.
The solution doesn’t lie entirely with the government, however. Residents of Ghana need to do their part as well by conserving energy whenever possible. If you are building a home in Ghana, you should incorporate energy saving features into your home. These may include:

• Skylights
• Solar panels
• Energy efficient appliances
• Solar water heaters
• Emergency backup generators

If you are unsure of the best way to include features such as these into your new or existing home, Ghana Homes Group can help. They employ the best engineers and architects and can help you find solutions to conserve energy and help minimize the impact of blackouts on your lifestyle.

How to Add Solar Energy When Designing Your House Plan

Ghana has experienced quite a bit of economic growth in recent years. This, in part, has transformed the country from a low-income to a lower middle-income socioeconomic status and enabled more people to build new homes. The 2000 Population and Housing Census reported a total of 3.7 dwellings in Ghana with an annual growth rate of 2 percent. This means that 2.3 million new homes are expected to be built by the year 2025. Unfortunately, growth like this is often accompanied by growing pains of some sort.

Power Blackouts

For Ghana, there is not a large enough power supply to keep up with the growing demand. As a result, the entire country has been experiencing blackouts as the Electric Company of Ghana has been load-shedding to manage the supply shortfall. This is expected to continue for the next several months according an article in Africa Review. The government is working with the Electric Company of Ghana as well as other entities in an effort improve the infrastructure and add approximately 3,000 additional Mega Watts to the country’s power grid by 2015. This may or may not be enough to keep up with the growth and demand. For this reason, developers are encouraging those who are in the planning stages of home building to add solar energy features to their house plan.

Solar Energy Options

Ghana’s location near the equator makes it an ideal place to harness the sun’s energy and convert it to much needed power. Following are a few options you may want to consider.

1. Solar Panels - When most people think of solar energy, they automatically think of large solar panels attached to the roof of a home or business. This is a viable option, albeit one of the more expensive ones.
2. Skylights or Solar Tubes - Skylights or solar tubes are a more affordable option. Solar tubes are essentially the same thing as skylights but they are smaller in size and work better when roof space is minimal. Either option will reduce the need for electricity by flooding frequently used rooms such as bathrooms and kitchens with natural light.
3. Solar Water Heater - Water heaters require a lot of energy. A solar water heater can reduce a household’s energy consumption anywhere from 50 to 70 percent.

For additional ideas or more detailed information on adding solar energy features to your house plans, contact Ghana Homes architectural services.

A Look At How Construction Loan Works In Ghana

It wasn’t all that long ago that construction loans were introduce to the financial market in Ghana. This has enabled many people who otherwise have not been able to build—or even own—a home of their own to do just that. It has also presented more opportunities for foreign investors.

What Is A Construction Loan?

A construction loan in Ghana works in much the same way that it does in other countries and is considered temporary-to-permanent financing. Borrowers are approved for a certain amount of money prior to construction. They are then required to make interest-only payments on the amount of money that is spent during the construction phase for up to one year, or until the certificate of occupancy is issued by the building inspectorate. Once the home is complete, the balance due is rolled over into a 15 or 20 year mortgage. Borrowers are only required to apply for one loan, however, and only pay one set of closing costs.

Who Can Apply?

Applicants must be at least 18 years of age and be able to prove that they are credit worthy. Even if a person has already started the construction process, they can still apply for a construction/completion loan.

How To Apply?

There are five major financial institutions in Ghana that offer construction loans: CalBank, Fidelity Bank, Ghana Home Loans, HFC Bank and Stanbic Bank. While each one has its own slight variations in the application process, borrowers are typically required to provide the following information:

• Two forms of personal identification.
• Address verification.
• Proof of income.
• Three months of bank statements.
• Valid life insurance policy.
• Proof of land ownership.

Land ownership is often the most difficult thing to prove when applying for a construction loan in Ghana. If you need help doing so, you may want to consider contacting Ghana Homes Group. They employ full-time land lawyers who can research land and find titles that prove the land is not part of a communal trust.

What Are The Terms?

The borrower is typically required to make a down payment of at least 20 percent. Some financial institutions also allow borrowers to capitalize any upfront fees and charges to ease burden of the down payment. The terms of the loan are usually 15 years, although some banks offer 20 year mortgages. Only adjustable rate mortgages (ARM) are offered in Ghana.

7 Factors to Consider When Choosing a House Plan for Your Dream Home in Ghana

It can take years to save up enough money to build your dream home in Ghana—some people save for 10 years or more! After waiting this long, you may be in a hurry to get things started and choose a house plan without really thinking every aspect of the home through. Instead, take your time and take these factors into consideration when choosing a floor plan.

1. Are the bedrooms grouped or separated? If you have young children you probably don’t want a floor plan with the master bedroom on one side of the home and the other bedrooms on the other side of the home.
2. Is there enough space? You want to make sure that your existing furniture will fit. Also, if you have a large extended family that will frequently gathering in your home the size and openness of the common living space is an important factor.
3. Can you afford the cost of construction? Bigger isn’t always better. Many people do not realize just how expensive raw materials and labor can be. According to a report titled The Housing Market in Ghana published by the Bank of Ghana, the average prices of new construction homes are:
   • One Bedroom: 33,145.00 Ghana Cedi (17,500 US Dollars)
   • Two Bedroom: 41,668.00 – 48,297.00 Ghana Cedi (22,000 – 25,500 US Dollars)
   • Three Bedroom: 60,608.00 – 68,184.00 Ghana Cedi (32,000 – 36,000 US Dollars)
4. Can the house plan be modified? House plans that are expandable offer you more flexibility if your needs change in the future.
5. Is the house plan engineered correctly? Once you submit your building permit application and floor plans to the Ghana Land Commission, it can take up to 3 months for approval. You want to make sure that the plans are engineered correctly so that you can obtain a permit without further delay.
6. Do any areas of the home need to be handicap accessible? If so, you want to choose a floor plan without stairs. The doorways and hallways may also need to be wider.
7. Is outdoor space important to you? An outdoor leisure space such as a covered porch can expand the usable square footage of your home and make it more enjoyable.

For more tips and advice visit Ghana House Plans. They employ the best local architects in the business and can create the perfect floor plan for your dream home in Ghana.

Why A Residential Building Permit In Ghana Is Necessary

The recent collapse of a shopping mall in Accra has brought a lot of attention to building permits in Ghana. It was determined that the building collapsed because the foundation was not strong enough and the deadly disaster could have been averted if the developer had obtained the necessary permits. Yet, many landowners are still circumventing the law. According to a survey conducted by the Physical Planning Department of the Sekondi/Takoradi Metropolis approximately 36 percent of the buildings in the area were built without obtaining the necessary permits. Ebenezer Dadzie Pantsi, head of the PPD has been cautioning developers to heed building codes and urged local authorities across the country to better educate landowners on the importance of permits.

Purpose Of Permits

Building permits are not designed to make it harder or more expensive to build a home in Ghana. The purpose is simply to strengthen the buildings and prevent disasters such as the mall collapse. Once a building permit is obtained, various governmental agencies see to it that the building is structurally safe. Some of the key elements in the process are:

• Architectural and engineering design for approval from the Accra Metropolitan Authority
• Fire protection opinion from the Fire Department
• Inspections at the end of each phase of construction (foundation, floor level, rafters, roof, etc.) by the Building Inspectorate

Consequences of Building Without A Permit

The consequences of building without a permit can be quite costly. They may range from a monetary fine to the complete demolition of the home by local authorities and loss of investment. Modern Ghana reported that in 2011 more than 500 homes without building permits were demolished around the Weija Dam to prevent it from collapsing from unauthorized building encroachments. The financial loss of having your home demolished pales in comparison to other consequences of building without a permit—the loss of human lives.

Help With The Permit Process

The permit process can be difficult those who are unfamiliar with the local laws and regulations—especially foreign investors. Working with professionals such as the Ghana Homes Group can make the entire building process easier. They can help you choose a house plan that will be approved by the Accra Metropolitan Authority, prove that you legally own the land you intend to build on and submit an application to the Land commission.

Is It Time To Invest In Ghana Real Estate?

If you are looking for foreign investment opportunities, you may want to consider investing in Ghana real estate. The country has shown tremendous signs of political stability and economic growth in recent years, making it a good time to invest in Ghana. In fact, in a 2009 White House Press Release, President Barack Obama stated that, “…far too often discussions of Africa are focused on crisis. Ghana is not in crisis, and it's an example for the region and more broadly.”

Ghana's Growth

According to the world economic growth charts, Ghana’s GDP grew by 14.4 percent in 2011. This was largely due to new oil production and construction projects. While the 2013 estimates for economic growth are a bit more modest at 7.5 percent, the country’s economy is steadily growing. Ghana is listed in Stage 1 of the 2012-13 Global Competitiveness Report published by the World Economic Forum and is expected to sustain its competitiveness. The country has demonstrated more than 25 years of sound management. Another sign of Ghana’s tremendous economic growth is that World Bank recently upgraded Ghana’s economic classification from low-income to a lower middle-income status.

Ghana Residential Real Estate

Despite the shift in economic status, there still aren’t many housing opportunities for middle income families. Those who have chosen to invest in Ghana have primarily focused on upper class residences and neglected the growing demand for affordable, middle class residences. The local real estate industry needs investors to help finance medium scale projects for middle-income projects.

Commercial Real Estate

Demand for commercial real estate is also high. Retail occupancy rates are hovering right around 100 percent. Many international retailers have recently opened up shop in Ghana, including:

• Shoprite
• KFC
• Woolworths
• Bata
• Deli France

With the success of these companies, it is expected that more American and European retailers will soon follow.

Investment Opportunities

It is time to invest in Ghana real estate. The lucrative investment opportunities are limitless. The demand is high for both residential and commercial projects. Investing in either type of real estate, however, requires in-depth knowledge of the building laws and local industry; experience is essential to the success of investments. Ghana Homes Group has that experience. For nearly a decade, the esteemed company has been bringing foreign investors and developers together with local engineers and architects to complete quality projects throughout the country.

Related Articles

• 4 Simple Ways to Build Your Dream Home in Ghana this Year
• How to Get a Building Permit in Ghana in Record Time
• Alert: Ghana Building Regulations You Should Know

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