Dealing decisively with housing deficit is my government’s top priority, says Akufo-Addo
President Akufo-Addo assures Ghanaians that his government has made clearing the current housing deficit of two million homes a top priority
President Akufo-Addo says his government has made clearing the current housing deficit of two million homes a top priority and that, should voters retain him in office come December, much more support will be given to the housing sector in Ghana.
President Akufo-Addo made this commitment when he addressed a gathering to commission the National Mortgage and Housing Finance Initiative Estates at Community 22, Tema, in his first stop on the second day of his four-day campaign tour of the Greater Accra Region.
The government, as part of the financial sector policy initiatives set out in the 2018 Budget Statement and Economic Policy, approved the National Mortgage and Housing Finance Initiative (NMHFI) to address the demand-side challenges of home ownership in Ghana.
In his remarks, the president said that the country has a huge housing deficit, which has risen over the years, especially in the urban areas.
“Despite an annual supply of about 40,000 housing units, we are unable to meet the annual demand of some 70,000 homes each year, and the housing deficit has now exceeded two million housing units,” he said.
Poor appetite for mortgage financing
The demand-side challenges of home ownership, President Akufo-Addo said, include a lack of adequate long-term funding, high costs of capital and high non-performing mortgage loans. In addition to restrictive banking regulations, high interest rates on mortgages have reduced the appetite for mortgage financing.
Wishing to fix the demand-side challenges of home ownership, the government approved the National Mortgage and Housing Finance Initiative in 2018 with the aim of stimulating the local-currency mortgage market.
“In operationalising the initiative, the National Housing and Mortgage Fund (NHMF) was set up to pilot two schemes – the National Mortgage Scheme (NMS) and the Affordable Housing REITs (rent-to-own) scheme,” the president said. “The Fund is now working with players in the housing market – ie, homebuyers, developers and banks – to address the issues and create an enabling environment for a thriving housing market.”
Under the National Mortgage Scheme, mortgages are being underwritten at rates of 10%-12% by the participating banks: GCB Bank Ltd, Stanbic Bank Ghana Ltd and Republic Bank Ghana Ltd. This intervention has reduced mortgage rates by over 60%, compared to the average market-rate reduction of 28%.
The Affordable Housing REITs is promoting the rent-to-own scheme with monthly rent payments only, after a period of which the occupant has the option to purchase the home outright. The rent-to-own scheme will help eliminate the burdensome two-year rent advance system. It is designed to give low-income workers the opportunity to rent and eventually own their own home, with the focus on flats and inner-city rehabilitation.
“The government will, therefore, use this framework – the Affordable Housing REITs – to revive the affordable housing concept and complete many of the abandoned housing units across the country started by the second president of the Fourth Republic, His Excellency John Agyekum Kufuor,” President Akufo-Addo said. “The Affordable REITs will become the offtaker of the properties for the rent-to-own scheme.”
Support for low income earners
In brief remarks at the ceremony, the Minister for Finance, Ken Ofori-Atta, said that mortgage financing aimed at supporting low income earners in the country will drive efforts of the Finance Ministry in the next Akufo-Addo government if Ghanaians maintain it in office.
The pilot phase of the housing initiative executed in 2019 and 2020 includes the development of a new community at Tema Community 22.
The project works entailed the building (over a nine-month duration) of 204 houses, consisting of one- and two-bedroomed standard and expandable housing units with infrastructure (including water, electricity, drainage and roads).
GCB Bank Ltd will underwrite mortgages for the housing units.
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