Housing Cost, Financing and Affordabilty in Accra

UNIVERSITY OF GHANA
UNIVERSITY OF GHANA BUSINESS SCHOOL
HOUSING COST, FINANCING AND AFFORDABILTY IN ACCRA
NANA SARPONG AGYEMAN-BADU
(10551754)
THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON
IN PARTIAL FUFILMENT OF THE REQUIREMENT FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION (FINANCE)
JUNE 2017
DECLARATION
I hereby declare that, except for references to other peoples work, which have been duly
acknowledged, this dissertation is the result of my own research work, carried out at the
University of Ghana Business School, under the supervision of Professor Joshua Abor.
.. .
Nana Sarpong Agyeman-Badu Prof. Joshua Abor
Date . Date
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DEDICATION
This research work is dedicated firstly, to the Almighty God for seeing me through a successful
completion of my Master of Business Administration (Finance). I also dedicate this work with
love and sincere gratitude to my dear parents Mr and Mrs. Agyeman-Badu, who supported me
financially to undertake this programme.
To my family and friends who have supported me one way or the other for me to finally get to
this point, I say God bless you all.
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ABSTRACT
Housing affordability has become one very contentious issue in Ghana. There has been a recent
boom in the real estate industry with several housing estates springing up in the major cities
especially the Greater-Accra Region, however the national housing deficit does not seem
reduce but is rather going up. This research sought to look at the affordability from the
perspective of the end user and certain perceptions they have on housing affordability, various
financing options and how land issues also affect the affordability of houses. This research had
331 respondents answering various questions relating to their incomes, preferences on
financing housing purchases, whether they will buy their own or purchase from real estate
agents and issues related to the land tenure system. The findings of the research showed that
an overwhelming majority of the respondents did not trust real estate companies and preferred
to build their own homes. Majority of them also preferred to self-finance instead of seek
assistance from financial institutions. Many gave reasons of mortgages being too expensive as
well as houses having become very expensive. With respect to the land tenure system, many
believed the dishonesty of land owners to be the biggest problem in purchasing land as well as
not have very strong regulations with regards to land issues and a poor land registry system.
Conclusions drawn are that, most real estate companies are not thorough with their prospective
home owners with respect to giving a justification on why their houses cost that much. The
mortgage system is still rudimentary and expensive and that it should be looked at a redesigned
to come out with products which do not seem to discriminate against most consumers with
respect to eligibility. There is also too much fraud within the land tenure system which makes
so many people fall victims and lose substantial amounts of money. If the land tenure system
is well regulated with a complete registry of all lands compiled but the Lands Commission,
potential land buyers will know exactly who to talk to and how exactly they can come into
good purchasing agreement terms with land owners.
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TABLE OF CONTENTS
DECLARATION ........................................................................................................................ i
DEDICATION ...........................................................................................................................ii
ABSTRACT............................................................................................................................. iii
Table of figures ......................................................................................................................... ix
CHAPTER ONE ........................................................................................................................ 1
INTRODUCTION ..................................................................................................................... 1
1.1. Research Background .................................................................................................. 1
1.2. Research Problem ........................................................................................................ 2
1.3. Research Purpose ........................................................................................................ 3
1.4. Research Objectives .................................................................................................... 4
1.5. Research Question ....................................................................................................... 4
1.6. Significance of Research ............................................................................................. 4
CHAPTER TWO ....................................................................................................................... 6
LITERATURE REVIEW .......................................................................................................... 6
2.1. Introduction ................................................................................................................. 6
2.2. Housing Financing Scheme in the United States of America ..................................... 6
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2.3. Housing Financing Schemes Nigeria .......................................................................... 7
2.4. Housing Financing Scheme in the Euro Area ............................................................. 8
2.4.1. Factors Influencing High Mortgage Application in the Euro Area ..................... 8
2.5. Housing and Housing Financing Overview in Kenya ............................................... 10
2.6. Housing and Housing Financing Overview in the United Kingdom ........................ 12
2.7. Other Housing and Housing Financing Elsewhere ................................................... 14
2.7.1. Mexico ............................................................................................................... 14
2.7.2. China .................................................................................................................. 14
2.8. Chapter Summary...................................................................................................... 15
CHAPTER THREE ................................................................................................................. 17
OVERVIEW OF HOUSING FINANCE IN GHANA ............................................................ 17
3.1. Introduction ............................................................................................................... 17
3.2. Stock of Houses ......................................................................................................... 19
3.3. The Housing Finance Regulatory Framework .......................................................... 20
3.3.1. The Mortgages Decree 1972 (NRCD 96) .......................................................... 20
3.3.2. The Home Mortgage Guarantee Scheme, 1985 (SMCD 23) ............................. 21
3.3.3. The Home Mortgage Finance Law, 1993 (PNDCL. 329) ................................. 22
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3.3.4. Home Mortgage Finance Act, 2008 (Act 770) .................................................. 23
3.4. Chapter Summary .............................................................................................. 24
CHAPTER FOUR .................................................................................................................... 26
METHODOLOGY .................................................................................................................. 26
4.1. Introduction ............................................................................................................... 26
4.2. Research Design ........................................................................................................ 26
4.3. Population of Study ................................................................................................... 27
4.4. Sampling Size and Technique ................................................................................... 27
4.5. Data Collection Method ............................................................................................ 28
4.6. Limitations ................................................................................................................ 28
4.7. Ethical Considerations............................................................................................... 28
CHAPTER FIVE ..................................................................................................................... 29
ANALYSIS AND DISCUSSION OF RESULTS ................................................................... 29
5.1. Introduction ............................................................................................................... 29
5.2. Demographic Information of Respondents ............................................................... 29
5.2.1. Age Range .......................................................................................................... 29
5.2.2. Area of Occupation ............................................................................................ 30
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5.2.3. Salary Range of Respondents ............................................................................ 31
5.2.4. Current Housing Status of Respondents ............................................................ 32
5.3. Main Findings ........................................................................................................... 33
5.3.1. Preferred Choice of Home Ownership and Building Material .......................... 33
5.3.2. Preferred Financing Option................................................................................ 35
5.3.3. Land Acquisition Challenges ............................................................................. 38
5.4. Other Findings ........................................................................................................... 39
5.4.1. Knowledge in building construction .................................................................. 39
5.4.2. Housing Selection Priority ................................................................................. 40
5.4.3. Home Ownership Status .................................................................................... 42
5.4.4. Preferred Cost of Two Bedroom House............................................................. 43
5.4.5. Preferred Cost of Land ....................................................................................... 45
CHAPTER SIX ........................................................................................................................ 47
SUMMARY, CONCLUSION AND RECOMMENDATIONS .............................................. 47
6.1. INTRODUCTION..................................................................................................... 47
6.2. Key Findings ............................................................................................................. 47
6.2.1. Lack of Trust in Real Estate Companies............................................................ 47
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6.2.2. Residents prefer to finance home purchase and construction personally .......... 48
6.2.3. Land Tenure System in Ghana is very terrible .................................................. 48
6.2.4. Residents want affordable houses but do not think affordable .......................... 49
6.3. Recommendations ..................................................................................................... 49
REFERENCES ........................................................................................................................ 52
APPENDIX .............................................................................................................................. 55
QUESTIONNAIRE SAMPLE ............................................................................................. 55
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TABLE OF FIGURES
FIGURE 1: AGE CATEGORY OF RESPONDENTS............................................................ 30
FIGURE 2: AREA OF OCCUPATION OF RESPONDENTS ............................................ 31
FIGURE 3: AVERAGE MONTHLY INCOME RANGES .................................................... 32
FIGURE 4: HOUSING STATUS ............................................................................................ 32
FIGURE 5: PREFERRED CHOICE OF OWNERSHIP ......................................................... 34
FIGURE 6: PREFERRED HOUSING MATERIAL. .............................................................. 34
FIGURE 7: PREFERRED SOURCE OF FUNDING ............................................................. 35
FIGURE 8: RELATIONSHIP BETWEEN SALARY AND CHOICE OF FINANCING...... 36
FIGURE 9: RELATIONSHIP BETWEEN FINANCING OPTION AND OCCUPATION .. 37
FIGURE 10: RELATIONSHIP BETWEEN PREFERRED COST PRICE OF 2 BEDROOM
HOUSE AND SOURCE OF FINANCING..................................................................... 38
FIGURE 11: PERCEIVED LAND ACQUISITION CHALLENGES .................................... 39
FIGURE 12: BUILDING CONSTRUCTION KNOWLEDGE .............................................. 40
FIGURE 13: PRIORITY IN HOUSING SELECTION........................................................... 42
FIGURE 14: HOME OWNERSHIP STATUS ........................................................................ 43
FIGURE 15: PREFERRED COST OF 2-BEDROOM HOUSE ............................................. 44
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FIGURE 16: LINK BETWEEN SALARY AND EXPECTED PURCHASE PRICE OF 2-
BEDROOM HOUSE ....................................................................................................... 45
FIGURE 17: PREFERRED COST OF ONE PLOT OF LAND.............................................. 46
FIGURE 18: RELATIONSHIP BETWEEN INCOME AND PREFERRED COST OF LAND
.......................................................................................................................................... 46
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HOUSING COST, FINANCING AND AFFORDABILITY IN ACCRA
CHAPTER ONE
INTRODUCTION
1.1. Research Background
Shelter is one of the three basic needs of every person including food and clothing, per
Abraham Maslows Theory of Needs. As such it has become very necessary for every human
to seek basic shelter to be in the right frame of mind to work and be productive. The
Government of Ghana has taken into cognisance, the fact that housing is a very critical has not
really been tackled with the urgency it requires.
The UN recommended definition of a house as a structurally separate and independent place
of abode such that a person or group of persons can isolate themselves from the hazards of
climate such as storms and the sun was adopted. This includes any accommodation structures,
such as separate houses, semi-detached houses, flats/apartments, compound houses, huts, tents,
kiosks and containers (GSS, 2012).
Population growth caused by rural-urban, have made housing one of the most critical
challenges currently facing the country. Increasing overcrowding, declining quality of housing
and access to housing services characterize much of the housing stock in Ghana. The main
challenges in housing can be classified into two which are: the quantity and quality of housing.
The Ghana Housing Profile of 2011 shows that the current situation of quantitative and
qualitative challenges in the housing sector is very serious, requiring urgent action. For several
years, Ghana has been battling with these challenges with various polices formulated to address
them but none of them has been fruitful. (National Housing Policy, 2015).
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Compared with other advanced countries, the housing industry in Ghana is seriously under-
developed. Prices of houses have shot up significantly in the major cities like Accra, Tema,
Kumasi and Takoradi which is as a result of a sharp rise in middle-class citizens and an
uncontrolled rural urban migration leading to expansion of these cities and as such have turned
the housing industry into one of the critical developmental issues facing policymakers. Of
importance to policy is the pricing and sources of funding required to meet the huge demand
for housing in Ghana which is estimated at about one million units over the next ten years
(Bank of Ghana, 2007).
CHF found that access to land and housing for most Ghanaians is still tantamount to the
ultimate form of social security. House and property owners will only sell their houses if they
confronted with serious financial crisis. Because of the extended family system which is
actively practiced, relatives are not barred from staying with households although this could
pose a problem of overcrowding. This has resulted in the poor design of houses and housing
layouts and creating issues on the marketability of these lands and houses. The customary land
ownership system possesses many commendable features: it is locally controlled, relatively
inexpensive to operate, and potentially equitable in its land allocation. It is however difficult
for people living on such lands to acquire mortgage facilities to develop the land and make it
more habitable. (CHF International, 2004).
1.2. Research Problem
Research into this sector has been focused on the end users response without pointing out what
exactly they will want in an affordable house. Yirenkyi (2014) targeted residents, government
agencies, three real estate companies and only one mortgage institution for data, but didnt give
much detailed information from the end user on what they want. There is the need to get a
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much-focused knowledge on what affordable housing is to people. This will give a broader
scope to the research with a bit more definition
Several researches have gone into the accessibility of affordable housing and shown that
many people cannot afford homes. No link has been made to income levels and the cost of
housing oneself. The Bank of Ghana (2008) sampled the average price of houses estate
companies are offering but did not consider how much people are willing to pay for a decent
accommodation. It is therefore critical to gather data on incomes of various workers and how
much they can afford to pay for a house and how they will raise the needed funds for it.
Although a lot of research has gone into housing in Ghana, especially affordable housing, there
is not much information on whether people want already built homes by real estate companies
or will personally want to undertake the projects themselves in accordance to their taste, which
brings into question the issue of sustainability and maintenance. Reasons as to why potential
homeowners may opt for any of the two options are not documented. Adjei et al (2015),
concluded that material costs and construction costs were the main barriers to having affordable
houses built for most the populace but did not link it to whether that would make one opt for
his own housing project or buy from a real estate agent. This research seeks to understand the
most preferred choice and know why. It should give real estate developers who may have
invested so much but cannot get buyers to know what potential homeowners seek in their
personal homes and decide to go in for less costly materials and efficient technology.
1.3. Research Purpose
The purpose if this study is to understand how individuals finance the construction of homes
and the preferred choice of building. Also, this study looks at the current average price of
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houses and compare it to the average income of the average Ghanaian to estimate how
affordable a house should be.
1.4. Research Objectives
The objectives of the study are:
i. To find out if people prefer to purchase from real estate companies or build on their
own.
ii. To examine the various sources of funding and most preferred source for the
construction or purchase of homes.
iii. To investigate the challenges potential home owners, face with respect to land
acquisition and resolution.
1.5. Research Question
The study seeks to address the following questions:
i. Do potential home owners prefer to purchase from real estate companies or build on
their own?
ii. What are the various sources of funding and most preferred source for the construction
or purchase of homes?
iii. What are the problems faced in acquiring land and how are they resolved?
1.6. Significance of Research
The significance of this study is to enlighten government and the private sector within the
residential construction industry have an insight as to what majority of the middle class,
especially the younger adults, would want to pay for a decent accommodation and what the
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decent accommodation really entails and if possible dispel the long-held notion that Ghanaians
preferred large spaces rather than own a decent accommodation irrespective of the size.
This study will challenge engineers and architects to also be more innovative and come out
with cost effective housing designs and construction methods which will suit the pockets of the
young man and woman who have just started out life.
Financial institutions will also get an insight into how potential home owners manage to raise
money in their ambition to own their own home and come up with friendlier home financing
products to attract potential home owners who are not interested in mortgage to engage their
services.
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CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
Housing is one of the most basic needs to man and as such it is very critical to look at this
sector of the economy. Many studies have gone into this field, researching into various housing
schemes world-wide, as well as different housing technologies which seek to make housing an
easy to acquire asset.
2.2. Housing Financing Scheme in the United States of America
Hoskins et al (2013) suggested that the mortgage system is the most popular vehicle used in
housing finance in the United States. Many are confronted with either renting or owning a
house and various factors like the households income levels as well as expenses and future
projections inform this decision. Those who decide to do usually have some savings or financial
resources available. . In the United States, most potential homeowners take loans known as
mortgages, which use the real estate as collateral. Before the Financial institution issues a
mortgage, certain considerations are made like the mortgagers credit score, income and debt
portfolio and the price of the house about to be bought. Other documents like tax returns are
needed during the underwriting process which could take weeks or even months to complete.
The mortgage application costs are usually expensive to the borrower since a lot of processing
fees are paid upfront and even pays additional costs when the mortgage is closed.
In the United States, the most common mortgage is the 30 year fixed, self-amortizing mortgage
which allows the borrower to pay some interest as well as principle at the same time till the
loan is completely paid off. Although it is a 30 year loan, most mortgagers pay off the loan
6
earlier than the loan period. Some repay the mortgage in full during the period, some also go
in for new mortgage to pay off an existing mortgage whilst others choose to sell the house and
use the proceeds to pay the mortgage. Other mortgages, however, choose to default on the loan
and end up having the lenders repossess the house, auction it and use the money to offset the
remaining balance. (Hoskins, Jones and Weiss, 2013)
Hoskins et al (2013), also discovered that lenders have a way of protecting themselves. They
usually make it a requirement for a borrower to make a 20% down payment on the house they
wish to purchase. However, several options are available for those who do not satisfy this
requirement. Some do take a second loan to cater for the down payment. Another option is for
the mortgagor to purchase for a mortgage insurance policy which compensates the mortgagee
should the borrower default on the loan. This mortgage insurance is mostly patronised by
private businesses or the federal government.
2.3. Housing Financing Schemes Nigeria
In other countries like Nigeria, cooperative societies have come together to form cooperative
unions to serve the interests of low income earners. The formation of cooperative societies has
come about as a result of high economic hardships which has made survival quite difficult for
people and thus must come together to assist each other financially. Amongst themselves they
are able to regulate and manage the risk involved with their savings. The members of these
societies are usually low to medium income earners who contribute monthly into a pool and
receive very low interest loans. Cooperative unions are then formed when these societies come
together and they serve like an oversight for the activities of the societies as well as become
lenders for the societies as well. (Oyewole, 2010)
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The formation of cooperative societies initially was necessitated by the need to enhance the
trade and commercial activities of members who as contributors have access to loans from the
societies. However, the societies have become sources of succour not only to traders but also
to farmers and small-scale industrialists. Many members have also seized the opportunity to
obtain loan for housing and other pressing needs (Oyewole, 2010).
2.4. Housing Financing Scheme in the Euro Area
In Europe, housing wealth is considered an important component of the net wealth of a
household, while loans seem to be the main liability. Therefore, whenever there are increases
in the prices of houses, it is felt directly by the households and has huge implications on the
expenditure and ability to repay any form of debt incurred. As at 2007, the average amount of
outstanding mortgages was about 42% of GDP from a 1999 figure of 27% in Europe. (ECB,
2009)
The amount of debt within the mortgage market is due to low interest rates and high demand
of mortgages with longer maturity durations of the mortgages. Many lenders have also devised
competitive mortgage products which has attracted many borrowers to go in for mortgages.
(ECB, 2009)
2.4.1. Factors Influencing High Mortgage Application in the Euro Area
The ECB in 2009, noticed a certain trend within the euro area between 1999 and 2007 and
outlined the following factors as the reasons for the rising mortgage applications.
Disposable Income: The amount income available for households to spend has seen a sharp
increase from 1999 to 2007, within the range of 0.5% and 3%
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Interest Rates: Between 1999 and 2007, it has been realised that interest rates have generally
remained low within the Euro area. This is shown by the three-month EURIBOR, indicating
short-term interest rates, and the interest rate on ten-year benchmark government bonds as the
benchmark rate for longer-term maturities
The Liberalisation and Deregulation of Financial Markets: When some countries decided to
remove interest rate ceilings, it had a positive impact on the mortgage market. This generated
a lot of competition amongst the lenders and also paved way for new players to enter into that
space. This therefore caused borrowing costs to be competitive and also made mortgages easily
accessible to the larger public.
House Price Dynamics: There has been a lot of movement in the housing market with respect
to prices, recording an average annual increment of 6.1% from 1999 to 2007. Many countries
experienced double-digit growth figures until 2006. Germany, Austria and Portugal however
recorded slow or declining growth in house prices. There was a positive correlation between
house prices and mortgage lending although the cause for this trend was unknown. Over the
study period, increases in both were especially high in Ireland, Greece, Spain and Italy.
Activity in the housing sector: the number of dwellings per private household remained
relatively stable, while there was a general decline in the share of rented accommodation, with
Cyprus being a notable exception. In countries like Ireland, Spain, Cyprus and Greece, the
amount of housing developments started and finished, showed a rapid increase the price of
houses. This thereby caused an increase in the amount of mortgage applications.
Demographic Trends: The rate at which the demographics of a country also has an effect on
the demand on mortgages. The current trend on the Euro area has seen an increase in the
number of mortgages as well as rents of homes. In the euro area, the population expanded
9
annually by just below 0.5% between1999 and 2007, but annual growth rates above 1% were
recorded in Ireland, Spain, Cyprus and Luxembourg, in part reflecting strong net migratory
flows. In Spain and Ireland, demographic factors seem to have contributed to the strong
increase in loans for house purchase over the last decade. (ECB, 2009)
2.5. Housing and Housing Financing Overview in Kenya
The mortgage industry in Kenya has seen some very good developments with a rapid growth
and competition amongst lenders. For two years in a row, Housing Finance Kenya has
remained the leading mortgagee, followed by KCB, both providing 52.8 percent of outstanding
mortgage loans by value and 53.3 percent of existing mortgage accounts in 2014. Other major
mortgage lenders include: Standard Chartered, CFC Stannic, Equity, Co-operative, Barclays,
Commercial Bank of Africa, Development Bank and I & M bank. These ten banks contributed
85.5 percent of the value of outstanding mortgage loans by the end of 2014. As of 31 December
2014, the total mortgage book stood at Kshs164 billion (about US$1.8 billion) thus showing a
growth of 18.8 percent on the previous year. There were 22,013 mortgage loans in the market
by December 2014, an increase from 19,879 in the previous year. Despite these huge figures,
mortgages in Kenya are accessible to a minority of the population. (CAHF, 2015)
Kenyas housing and mortgage market is seriously constrained by affordability issues. This is
evident in the large presence of informal houses and slums across the country. This, together
with a high urbanisation rate (urban population grew at 4.3 percent in 2014) indicates that rental
housing, incremental construction and use of alternative building materials and technologies
are likely to remain a feature of housing in Kenya. To overcome the affordability problem,
lenders, developers, borrowers, cooperatives and NGOs have come up with different strategies.
For instance, providing credit products that match cash flows of the poor such as the home
improvement loan (Rafiki MFI and Bank of Africa) and incremental financing (Ujenzi Kwa
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Hatua meaning an incremental building loan by Humanity for Habitat). Low income
households have also devised another way to make houses affordable by purchasing large tracts
of land in groups. (CAHF, 2015).
A number of key factors determining the movement in formal housing market were laid out by
Arvanitis (2013), using Kenya as a case study. These elements included:
A wide gap between the demand and supply of houses. There are so many people in need of
houses but the market supply is quite low, hence it has impacted on the price of houses.
Another element is the cost of building a house itself. Materials used to are currently expensive
and driving general costs high.
Very few private real estate developers in Kenya can afford to supply houses of over 200 units
for middle to low income earners. Many cannot enter the housing market because of lack of
knowledge in building and availability of funds to embark on such large projects.
Many developers end up being in debt after finance is accessed due to construction delays and
unstable interest rates which weighs negatively on the financing of such developments. Some
also have access to equity as there are not that many investors ready to invest in the companies
to make their financial position strong enough to be eligible for loans.
The land tenure system is Kenya is seriously under-developed as well as the provision of off-
site infrastructure and servicing of land. Land planning is virtually unavailable and this affects
how houses are developed within communities. There are also complexities in the regulation
of land and houses.
Avanitis (2013) also recommended the following:
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That there should be the shift into cheaper alternative building technologies with respect to the
materials used. There should be a focused education of consumers on the benefits of these
cheaper materials.
That the local government should support real estate developers by putting in place various
infrastructure like roads, water supply, electricity and drainage available for developers to tap
into their sites.
That other alternative finance arrangements such as lease-to-own should be developed since
banks are not able to provide the kind of long-term finance needed by the housing sector. These
new arrangement can be developed in conjunction with various local financial institutions.
The local banks must have the capacity and capability to underwrite mortgages as well create
some competition amongst themselves. Microfinance institutions should also play a role in the
housing sector by providing tailor made mortgage products for most of its clients who are
mostly in the informal sector.
There should be provision of equity for estate developers which can help reduce the amount of
debt incurred by these developers. It was suggested that private equity funds could be an option
to look into.
There should be some technical assistance for interested developers and contractors in order
for them to maximize output in the delivery of housing units. (Avanitis, 2013)
2.6. Housing and Housing Financing Overview in the United Kingdom
In the UK, there is a huge argument on how to define affordability in housing and the scale of
measure to use. Most at times, a relation between the price of a house and income or earnings
are used, especially in policy circles as indicators for measuring housing affordability. The rate
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of long-term house price growth has made affordability a major policy issue. This is because
the long-term growth of house prices has outstripped average incomes. A typical first time
house buyer needed to get an equivalent of one years salary to be able to even afford a deposit
for a home. After attainability then comes sustainability, where by one was supposed to
measure how much a first-time buyer needs to save cover for interest payments on mortgage
and initial down payment. (Poon and Garratt, 2012)
Poon and Garratt (2012) suggest that there should be two key areas of further research on the
UK housing policy and these are in policy development and policy evaluation.
They suggested that developing policies to cover the existing housing stock could curb the
problem of market segmentation which is highly seen especially along geographical locations,
like in the case of London and South-Eastern England, where property is very expensive. These
kind of policies can facilitate the transaction of houses within the second hand market and in
the longer term, address the issue of affordability. (Poon and Garratt, 2012)
Poon and Garatt (2012) in the reported noted that the British Coalition Government intended
to solve housing affordability by giving more authority to the local assemblies but a certain
lack of central oversight on the supply of houses and planning could result in this plan not
bearing any fruit. They suggested that more holistic research was needed to evaluate this plan
as well as look into other policies which could help get houses to be more affordable. They
noted that in the past, the UK housing policy lacked focus and incoherence as well as several
contradictions and hoped that this will be reduced when the evaluation was done.
Williams and Whitehead (2015), suggested various housing associations are now supplying
about 10% of houses in England alone and have done better than the local assemblies. These
are usually non-profit bodies who have decided to focus on supplying affordable houses for the
13
low income earners and have been around for at least 200 years. They became well recognised
in the 1970s when the British government decided to offer them subsidies in capital to enable
them expand their operations and thereby invest more in the housing market.
2.7. Other Housing and Housing Financing Elsewhere
2.7.1. Mexico
Households who have access to mortgages are considered to be part of the formal sector as
they must have a bank account and pays their taxes. Unfortunately, according to Hicks (2015),
most potential consumers in Mexico are not in the formal sector and as such, creates a barrier
that prevents them from accessing mortgages to own homes. The government realising this has
been able to enrol such consumers into the formal sector through long term tax breaks and
incentives as they will be in the position to make future tax payments. A quasi-mutual fund,
INFONAVIT, has been set up for private sector workers, where a compulsory 5% of their
income is deducted and placed in this mortgage mutual fund. A similar situation also happens
in the public sector where 5% of the payroll is contributed into another mortgage mutual fund
called FOVISSSTE. These schemes has made about six hundred thousand mortgage facilities
available for the acquisition of both new and second homes. (Hicks, 2015)
2.7.2. China
China has seen a gradual evolution in the housing market since 1998 with increasing economic
growth and urbanization. This has allowed the migration of rural settlers to urban areas much
easier. This positive trend though cannot discount the fact that, there is also an accompanying
raise in the cost of houses raising affordability issues low- and middle-income households and
for young workers and migrants (Chen et al. 2010; Yang & Shen 2008).
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Prices of houses in urban China have been soaring since 1999, except during 2008 where there
was a decrease in prices due to the global financial crisis. The very main reason for this trend
was due to the rapid urbanization in China forcing more construction with in the urban housing
market (World Bank and DRC, 2013). As at 2014, the average price of a house was about 3.15
times the price in 1999 and 1.6 times the price in 2008. The effect of the higher prices are felt
in the larger cities like Beijing and Shanghai which affected the both the property market and
social stability (Yang & Chen 2014). However, incomes of households on China had also risen
appreciably since housing reforms were instituted in 1998. Therefore housing affordability
index had not gotten so bad since 1999 as per the research of Chen et al (2010). There was the
problem though of the purchasing power of households varying significantly from region to
region making the housing market quite volatile.
2.8. Chapter Summary
Many countries have tried very hard to deal with the issue of housing and making it available
to its citizens. United States of America has a vibrant mortgage system, although very
expensive. In this case, the mortgagor must be able to make a 20% down payment to be able
to qualify for a mortgage, aside other key characteristics like the potential mortgagors credit
rating, history and other qualification parameters.
Nigeria has found a way to make the source of funding easily accessible to low income earners
at lower interest rates to start their own housing projects. The coming together of cooperatives
societies to form unions and pool their resources together has made it possible for members of
these societies to gain access to funds.
In Kenya, various strategies have been devised to address the issue of affordability by providing
various credit products which are tailor-made for low income earners. The research has
identified various
15
In the United Kingdom, there have been attempts to use indicators to determine affordability.
Two issues were looked at in ones ability to afford accommodation; attainability and
sustainability. It has been argued that a more comprehensive research should be done on
housing policies by government to assess if they indeed made housing more affordable.
In the Eurozone, a very vibrant mortgage system has been noticed with incomes rising, thereby
making it possible for income earners be eligible for mortgages. Increments in disposable
income, lower interest rates, deregulation of the mortgage system are some of the factors that
have increased the high application of mortgages.
In China, household affordability varies so much that there is volatility in the pricing of houses
across the entire Chinese region, although there has been an upward trend since 1999. Despite
this, affordability index has not gotten worse, meaning there is some what some amount of
affordability.
16
CHAPTER THREE
OVERVIEW OF HOUSING FINANCE IN GHANA
3.1. Introduction
Several publications have been made on the issue of housing in Ghana and worldwide and they
really do cast a lot of light on the critical issue of housing and especially acquiring affordable
homes.
The Bank of Ghana believes that a house is one of the most important basic need of anyone
and that an improvement on the housing market has a positive ripple effect on other aspects of
national developments like an increase in employment in various parts of the country where
housing units are available, thereby increasing productivity. (Bank of Ghana, 2007).
Per Global Findex report, the use of credit was common 39.2% of adults over 25 years of age
reported that they took a loan in 2015. However, very few Ghanaians had an unsettled loan to
purchase a home: 1.9% of the top 60% of income earners and 3.1% of the bottom 40% of
income earners. Only five of Ghanas 26 banks officially offered mortgage loans as a product
HFC Bank, Fidelity Bank, CalBank, Stanbic Bank and UT Bank, which granted mortgages
on a limited basis to customers of its subsidiary UT Properties. In addition, Ghana Home Loans
(GHL) was the countrys only nonbank mortgagee focusing exclusively on residential
mortgage lending. Housing finance loans granted by banks represent just 3% of loans given
out. The total amount of home loans taken in Ghana was more than US$ 200 million with just
under 6,000 borrowers, while the housing finance system (as a share of GDP) is only 0.5%,
compared with the African average of 15.7% of GDP, making it one of the lowest in the world.
(CAHF, 2015).
17
Four main categories of mortgage loan products are provided for by the five banks and Ghana
Home Loans. The first is the Home Purchase Mortgage, which is used for purchasing new
houses. The borrower should be able to pay at least 20% of the cost of the home, then the bank
provides the remaining 80% as a loan for a period of 20 years at rates ranging from 27% to
32% in Cedi terms and 12.5% to 14% in dollar denominated loans. The second product is the
Home Improvement Mortgage, which is offered for renovation of already acquired property
for a period of 5 years. The third product is the Home Completion Mortgage, which are given
to people who want to complete houses under construction. The last product is the Home Equity
Mortgage, is used for realising equity locked up in a property. The Home Purchase Mortgage
is the most applied for product in the market. (CAHF, 2015).
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 as at the 2015, had the cheapest house (2 bedrooms) on the market
on a 40 m2 plot and which cost 95,000 (US$24,297), but unfurnished house with basic
finishes. For a house of this size, the monthly mortgage payment will be about GHC955
(US$245), after making a 20% down payment of 17,400 (US$4,600) to be eligible for the
mortgage and require that the prospective mortgagor be earning at least 2,387 (US$612) a
month to qualify. The range of salaries is from a minimum of 600 ($153) to 10,000
(U$2,564) a month. With this range, majority of formally employed Ghanaians are outpriced
within the housing industry (CAHF, 2015).
About 79% of households in Ghana live either in rooms in compound houses. In addition, 8.6%
of households live in several huts/buildings in the same compound. However, in urban areas
more households live in rooms in compound houses (55%) than in rural areas (35%). But in
rural areas higher proportion of households live in other types of rooms (44%) than in urban
18
areas (24%). Living in bungalows, semi-detached houses and flats or apartments is not common
among Ghanaian households. Only about 10% of households in the country live in these types
of dwelling. About 16% of urban households live in bungalows, semi-detached houses and flats
or apartments, while only 6 percent of rural households live in such dwellings. Many of the
residents in Accra and its environs, live in make-shift houses, with only 24% of the population
living in well-constructed bungalows, apartments and semi-detached houses (GSS, 2008).
The National Housing Policy Document (2015) defined an affordable house as one whereby a
household need not spend over 30% of its gross income on rent or purchase of a house whereby
the price or rent includes all taxes applicable by law as well as cost of insurance and utilities.
Anything beyond 30% is then deemed to be unaffordable.
The mortgage market has received very low patronage from Ghanaians due to 3 main reasons.
Firstly, people felt the commission fee of 1.5% annually was too high and made mortgages
unattractive even though the mortgagee bears a 10% default risk. The second reason was due
to risks and affordability caused the introduction of mortgages which had certain barriers for
existing and potential mortgages to apply for and the lastly, houses were too expensive for
people. (Bank of Ghana, 2008)
3.2. Stock of Houses
Data from the 2010 National Census indicates that the total stock of houses in Ghana was
3,392,745 of which 57.7% of them were counted in rural areas whilst the remaining 42.3%
were in urban areas. The census figure also showed that there was a 55.5% increase in the
housing stock since the last census in the year 2000. The regional distribution showed that
Ashanti (16.9%) had the highest proportion of houses, followed by Greater Accra (14.0%) and
Eastern (12.7%) regions. The Upper West region had the lowest proportion of the housing stock
19
(2.4%). Compared with the 2000 Census data, there are marked differences in the percentage
change in housing stock across regions. The increase was highest in Ashanti (74.6%) and
lowest in Upper East (29.0%).
The population per house was 7.3 and ranges from a low of 5.3 in the Volta region to a high of
9.6 in the Northern region. Generally, there was a reduction in the population per house from
8.7 to 7.3 between 2000 and 2010. (GSS 2010)
3.3. The Housing Finance Regulatory Framework
3.3.1. The Mortgages Decree 1972 (NRCD 96)
The NRCD 96 regulated foreclosure of mortgages in Ghana between 1972 and December 2008.
Sections 15 and 18(9) of the NRC.D. 96 banned foreclosure in the country. Section 15 of the
NRCD 96 states that:
[. . .] upon failure of performance of an act or acts secured by the mortgage,
the mortgagee may do either or both of the following:
a. sue the mortgagor or obligor or both on any personal covenant to perform;
and
b. realise his security in the mortgaged property in all or in any of the ways
provided in this part, and in no other way notwithstanding any provision to
the contrary in the mortgage.
The section 18(9) of the NRCD 96 also states that:
20
[. . .] notwithstanding any provision to the contrary in the mortgage, a
judicial sale ordered under this section shall be the only manner in which a
mortgagee may foreclose rights to redeem the mortgaged property.
Mortgagees could therefore not foreclose on defaulting loans. The only way mortgagees could
solve the issue of default by borrowers was resulting the court and apply for a court order to
sell the property which had been used as collateral (Boamah, 2011).
3.3.2. The Home Mortgage Guarantee Scheme, 1985 (SMCD 23)
Boamah also discovered that The Supreme Military Council Decree (SMCD 23), 1985 was
passed to establish a national mortgage and finance guarantee scheme in the Bank of Ghana.
The aim of the scheme was to:
promote the construction of owner occupier houses and finance the extensions to and
the renovation of dwelling units;
finance the construction of homes by housing developers;
provide indemnity to participating financial institutions that may incur default loss; and
establish a secondary mortgage market where mortgages could be sold to interested
parties as securities.
The SMCD 23 aimed at making the housing industry in Ghana at the time more attractive by
introducing tax reductions and sovereign guarantees against defaulting borrowers. It however
was repealed in 2008 by Act 770. The scheme lost ground when the government of the day was
overthrown in 1979 hence rendering it a white elephant in our statute books. It could not
achieve its aim of driving investment towards the housing industry in Ghana. (Boamah, 2011).
21
3.3.3. The Home Mortgage Finance Law, 1993 (PNDCL. 329)
The PNDCL 329 was passed to establish a Home Mortgage Financing Scheme in Ghana. The
objectives of the scheme were the provision of mortgages to prospective homebuyers in the
country and the provision of liquidity to the financial institutions that participated in the scheme
(Section 2 of PNDCL 329). Section 3(1) of the PNDCL 329 established the Home Finance
Company (HFC) Ltd to administer the scheme through some pre-selected financial institutions.
The pre-selected financial institutions were the Barclays Bank of Ghana Ltd, Ghana
Commercial Bank, Standard Chartered Bank (Ghana) Ltd, the Social Security Bank Ltd (now
SG-SSB), the State Insurance Corporation, and the National Savings and Credit Bank Ltd.
Section 3(2) of the law however, gave powers to the Secretary of Finance to amend the list of
the participating financial institutions on the advice of the Bank of Ghana and in consultation
with the HFC. The PNDCL 329, 1993 also provided state guarantee against default for
mortgages created under the scheme. Under this arrangement, the participating financial
institutions bore only 10 per cent default risk with the government of Ghana bearing the
remaining 90 per cent risk. The scheme insulated the participating mortgagees from significant
risk.
Mortgagees under the scheme were permitted to foreclose on defaulting loans (section 4(b)).
Also, section (14) of the Law stated that sections 18(9) and 14(b) of the NRCD 96, 1972 shall
not apply to any mortgage to which this Law applies. Mortgagees under the scheme were thus
exempted from the legal restriction on foreclosure by the sections 15 and 18(9) of the NRCD
96, 1972. The PNDCL 329, 1993 also provided some protections to the mortgagors as seen in
Section 6(5) of the Law which enjoined mortgagees to give reasonable notice to the mortgagor
and all encumbrances that he has notice before exercising his right to sell the mortgaged
property. Also, section 7 of the Law prevented mortgagees from taken possession of or
22
exercising their rights of possession of a mortgaged property where at least 85 per cent of the
total loan amount has been paid (Boamah, 2011).
Though the PNDCL 329, 1993 sought to create a sound regulatory environment to initiate the
development of housing finance market in Ghana, the intervention failed to achieve its desired
results. The pre-selected institutions failed to participate in the scheme mainly due to macro-
economic instability, difficulty in assessing the character and capacity of borrowers, and land
tenure insecurity in the country. Also, the state guarantee was not available for mortgages
provided by the non-participating financial institutions. Again, mortgagees who were not pre-
selected to participate in the scheme had no right to foreclosure without recourse to the court.
These financial institutions were therefore discouraged from granting mortgages. A level
playing field was not created for all mortgagees in the country. The scheme did not allow
competition to determine market participants. Free entry to the mortgaged market was seriously
constrained. Competition, free entry and efficiency are important critical success factors for
the development of mortgage markets. The pre-selection of participating financial institutions
and the powers granted the secretary to adjust the list of participating financial institutions from
time to time exposed the scheme to potential fraudulent practices, nepotism, and political
manipulation. The PNDCL 329, 1993 also did not define capital adequacy; state diversification
rules; and specify mechanisms to control self-dealing by management. All these factors
hindered the success of PNDCL 329, 1993 (Boamah, 2011).
3.3.4. Home Mortgage Finance Act, 2008 (Act 770)
Boamah (2011), gives a concise overview of Act 770 being that it was created a legal and
regulatory framework to control the mortgage market in Ghana, whereby it includes the
financing of construction or acquisition of residential facilities, refurbishment and
improvement of house, and other service related facilities of home by customers who wish to
23
apply for mortgages. It however did not repeal NRCD 96, 1972 but added more to it as seen in
(section 2(1), Act 770). However, a caveat was placed in section 2(2) of the Act 770 which
states that where there is an inconsistency between the mortgages decree and this Act, the
provisions of this Act shall prevail removing any form of ambiguity in both laws. Act 770
however, repealed the PNDCL 329, 1993 and the SMCD 23, 1976 whereby it allows
mortgagees the right to foreclose a defaulting loan without needing permission from a court.
This means that financial intuitions could now decide to repossess a house and choose to sell
it offset the remainder of the loan which is in default.
The Act 770 also offers protection to borrowers. The right of mortgagors under a mortgage
contracted is adequately protected. Mortgagees in the country are under an obligation to
disclose all relevant information concerning the mortgage to the mortgagor at least fourteen
days before disbursing a loan to the mortgagor. Mortgagors therefore enjoy adequate right to
information concerning the mortgage. Also, section 18(1) of Act 770 indicates that where a
mortgagee intends to sell a mortgaged property, the mortgagor and mortgagee shall cause the
property to be valued by a certified valuer agreed on by them. Also, section 19(1) of Act 770
states that a mortgagee shall not sell a mortgaged property for less than 85 percent of the
appraised market value of the property. These provisions protect mortgagors against under-
valuation of mortgaged properties which is the subject matter of sale. It helps to protect the
interest of the mortgagor in the mortgaged property. The use of public auction as a means of
liquidating the mortgaged property in the Act 770 seeks to protect mortgagors from possible
abuses by the mortgagees (Boamah, 2011).
3.4. Chapter Summary
The housing market from research made, still seems to be a luxury product rather than a
necessity. Cost of houses have placed many Ghanaians within the low to middle income range
24
in the outpriced category. Research has also shown that there are fewer houses in the urban
areas than in the rural areas and looking at the rise in rural urban migration, there are not enough
houses for the urban dwellers to occupy.
The mortgage market in Ghana has seen quite a number of transformations over the years since
independence. A number of banks, although a smaller percentage have decided to venture into
this product and developed various products to assist potential home owners in the acquisition.
Governments in the past have also instituted various mortgage laws which attempted to reduce
the housing deficit but have proved to be unsuccessful as most of these laws have either been
repealed or incorporated into newer laws.
25
CHAPTER FOUR
METHODOLOGY
4.1. Introduction
This chapter gives a detailed account of how data was acquired for this research. It gives a brief
geographical description of the study areas chosen and the reasons for choosing such areas for
the study. It talks about the research design, population of study, sampling size and technique,
data collection, limitations and some ethical consideration.
4.2. Research Design
This research applied both quantitative and qualitative research methods. This study is an
exploratory research. Exploratory researches are usually adopted when few or no researches
are done to look for patterns, ideas and hypothesis for further research to be done. Qualitative
research is more subjective in nature than quantitative research and involves examining and
reflecting on the less tangible aspects of a research subject, e.g. values, attitudes, perceptions
(Neville, 2005). Qualitative research has a set of rules guiding the researcher which offers a
way of exploring issues without quantifying it (Greener, 2008).
With the explanatory designs, this research will undertake a survey of how workers perceive
the housing sector, how financial institutions deal with financing the housing industry and how
real estate companies also fund their works. Open ended portions within the questionnaire was
provided for respondents to explain their opinions and explain the reasons for choosing certain
answers.
26
Furthermore, the descriptive design took the form of multiple choice questions in the
questionnaire, where respondents were to choose one of multiple answers that best suit their
preferences.
4.3. Population of Study
The population of the study comprises of home owners and tenants within the Greater-Accra
region, eligible for employment and above the age of eighteen years. Per the most recent data
of the number of registered voters provided by the Electoral Commission of Ghana, the number
stands at 3,063,986 voters as at December 2016. This population was chosen because they are
all eligible for employment per the National Labour Act and such potential home owners.
4.4. Sampling Size and Technique
Kumar (2011), defines sampling as the process of selecting a few out of the lot to become the
basis for estimating the occurrence of an unknown situation, representing the larger group. It
saves time, money and human resources but on the flipside, there is the probability of being
erroneous since it could be skewed.
In quota sampling, is selected from a location convenient to the researcher, in this case being
Greater-Accra Region, and whenever a person with this visible relevant characteristic is seen
that person is asked to participate in the study. The process continues until the required number
of sample is attained (Kumar, 2011).
Due to time constraints and the large size of the area of study, a sample size of at least 300
respondents was targeted, representing 0.01% of the population of registered voters who are
eligible for employment.
27
4.5. Data Collection Method
The method of data collection was done mainly electronically through e-mails and social
media. A questionnaire was designed online on kwiksurveys.com through which a link was
sent to possible respondents through e-mails, as well as shared on social media platforms such
as WhatsApp, Facebook and Twitter. As such it was not targeted at a group of people but
randomly.
4.6. Limitations
Since the area of study is the Greater-Accra, there was the possibility of respondents living
outside the study area to respond to the questionnaire. There was also the possibility of a
respondent answering more than once on both their phones and on computers.
4.7. Ethical Considerations
Since certain information were deemed to be confidential, the data collection was set to be
made anonymous so as respondents submitted their responses, personal information like name
and email addresses or phone numbers were not added ensuring secrecy and privacy. Also,
they were made aware of this condition before they went ahead to respond to the questions.
28
CHAPTER FIVE
ANALYSIS AND DISCUSSION OF RESULTS
5.1. Introduction
This chapter presents the full findings of this study as well as interpretation, description and
comparison of the various data gathered, guided by the objectives of this study which include;
Finding out if residents prefer to purchase from real estate companies or building their own
houses; Finding out the most preferred source of funding in acquiring a home; Finding out
challenges potential home owners or current home owners face in land acquisition.
5.2. Demographic Information of Respondents
This section basically gives and overview of basic demographics of participants of this study.
This include the age brackets, type of employment, income range. Overall, 331 respondents
took part in this research which far exceeded the expected number of 300 within a space of 5
days
5.2.1. Age Range
The age category can be classified 5 groups. Of the 331 respondents, more than three-fourth of
them fell in the young working class group. About 88% fall within the youthful range of 18
years to 35 years. Only 3 respondents in the pension class took part in this research representing
1% of the total number.
29
AGE CATEGORY
1%
4% 7%
9%
18 - 25
26 - 35
36 - 45
46 - 60
61 AND OVER
79%
Figure 1: Age Category of Respondents
5.2.2. Area of Occupation
With respect to the area of occupation of respondents, 15 categories of occupation were
provided for respondents to choose from including a category for those whose categories were
not included in the options to physically type out where they belong. In all, the majority of the
respondents were from the built environment sector, comprising engineers, architects, planners,
surveyors and contractors.
30
AREA OF OCCUPATION
GOVERNMENT UNEMPLOYED
EDUCATION, SECTOR 4% ADMINISTRATION
TEACHING 12% 1%
6% OTHER
HEALTH ENERGY 9%
3% 1%
LEGAL
1%
INSURANCE
Other
1%
20%
NGO
2%
MEDIA
ENGINEERING, 2% INFORMATION
ARCHITECTURE, BANKING
TRADING & 16% TECHNOLOGY
CONSTRUCTION 4%
COMMERCE
29%
9%
Figure 2: Area of Occupation of Respondents
5.2.3. Salary Range of Respondents
More than 50% of respondents earned salaries ranging between 1,000 to 4,000 with 26%
earning more than 4,000 and 16% earning below 1,000. According to GLSS (2014), the
annual per capita income for Greater-Accra is 5,428.50 which translates to 452.36 per
month. Therefore, all respondents are earning above the minimum daily wage.
31
AVERAGE MONTHLY INCOME RANGE

500 AND BELOW
7%
501 - 1,000
9%
6,001 AND MORE
13%
4,001 - 6,000
13%
1,001 - 2,000
23%
2,001 - 4,000
35%
500 AND BELOW 501 - 1,000 1,001 - 2,000

2,001 - 4,000 4,001 - 6,000 6,001 AND MORE
Figure 3: Average Monthly Income Ranges
5.2.4. Current Housing Status of Respondents
Out of the 331 respondents, 251 of them, representing 76%, do not live in their own homes
with the remaining 80 living in their personal houses.
HOUSING STATUS
Own House
24%
Rented
76%
Figure 4: Housing Status
32
5.3. Main Findings
This section seeks to interpret data gathered based on the main objectives of this report. It
discusses how respondents answered questions with respect to the research question asked
5.3.1. Preferred Choice of Home Ownership and Building Material
From the data gathered, it was discovered that 83% preferred to build their own houses from
the scratch rather than purchase directly from a real estate agent or company. An opportunity
was given for respondents to give more insight into their preferred choice of home ownership.
Various reasons were cited. Some of the most dominate reasons given include they are having
a direct input in the design and architecture of the house as well as personally supervising the
construction of the building, perceptions that a self-built house is cheaper, mistrust for real
estate companies not investing much into the structural stability of their buildings and use of
inferior items. The minority however felt it was convenient and less stressful acquiring a house
from a real estate agent, issues of land litigation are minimised. Figure 5 below gives a
graphical description of how respondents were distributed based on the answers given.
33
PREFERRED CHOICE OF HOUSE OWNERSHIP
16% 1%
BUILD YOUR OWN HOUSE
PURCHASE FROM A REAL ESTATE

AGENT/COMPANY
RENT AN ACCOMODATION
83%
Figure 5: Preferred Choice of Ownership
Also, four major building material options were provided to allow respondents to choose which
of them they preferred their houses to be made from. Interestingly, a little over 70% of
respondents preferred houses build with cement blocks, with 20% preferring clay brick based
houses. Steel container and herbaceous materials like wood and bamboo, were not very
favourable recording about 5% of respondents opting for them.
PREFERRED HOUSING MATERIAL

2% 3% 2%
20%
CEMENT BLOCK HOUSE
CLAY BRICK HOUSE
STEEL CONTAINER
HERBACIOUS
Other
73%
Figure 6: Preferred Housing Material.
34
5.3.2. Preferred Financing Option
The respondents were given the opportunity to choose how they prefer to finance their own
house construction and purchase. About 75% of them preferred to self-finance, rather than
apply for a bank loan. 1% preferred a mix of the two. The main reason many of them gave for
choosing to finance from their own income was the perceived high mortgage or loan rates.
Many respondents felt they still will not be owners of their houses if they were indebted to a
financial institution. The table below shows a pie chart of how respondents answered this
question.
PREFERRED SOURCE OF FUNDING

1%
24% BANK FINANCING(Mortgage)
PERSONAL FINANCING
Other (Please Specify)
75%
Figure 7: Preferred Source of Funding
Further analysis was made to see the relationship between the salaries of respondents and their
preferred choice of financing. In most situations, those who preferred self-financing where at
least twice the number of those who preferred to go from financial aid from financial
institutions. However, for those who earned 6,000 and more, the gap between the self-
financiers and potential mortgagers was a bit close. Figure 8 below gives a bar chart
distribution.
35
RELATIONSHIP BETWEEN SALARY RANGE AND

CHOICE OF FINANCING
BANK FINANCING(Mortgage) PERSONAL FINANCING BOTH
300
247
250
200
150
100 77 80
61
37 35
50 21
4
25 15 3 8 15 28 4
1 0 0 1 0 0
0
500 AND 501 - 1,000 1,001 - 2,001 - 4,001 - 6,001 AND TOTALS
BELOW 2,000 4,000 6,000 MORE
Figure 8: Relationship between Salary and Choice of Financing
Another relationship was also drawn to find out which respondents within an occupation set
most preferred to self-finance their houses and those who preferred loans. The table below
gives a distribution of the respondents with respect to their occupation and choice of financing.
Interestingly, even those working within the banking sector had more preferring to finance their
homes from their own incomes. This could possible mean that the perception held against cost
of mortgages being high could be true as even those coming from the mortgagee side are not
ready to patronize the service.
36
RELATIONSHIP BETWEEN CHOICE OF FINANCING AND

OCCUPATION
80 73
70
60
50
40 32 31
30 21 22 23
19
20 15 13
9 9 9 8 7 6
3 0 4 5
10 2 0 0 0 1 0 130 1 0 0 1 0 1 0 220 111 130 1
0
Figure 9: Relationship between Financing Option and Occupation
The table below shoes how respondents who chose their preferred source of finance, chose how
much they were willing to purchase a standard 2 Bedroom house. Understandably, most people
preferred the least expensive of the house cost ranges and most also preferred to self-finance
their acquisition of houses.
37
RELATIONSHIP BETWEEN SOURCE OF FINANCING AND

PREFERRED COST OF 2 BEDROOM HOUSE
50,000 - 80,000 80,001 - 100,000 100,001 - 120,000 120,001 AND ABOVE
160
142
140
120
100
80
63
60
39
40
25 25
17
20
8 8
3 0 0 1
0
Figure 10: Relationship between Preferred Cost Price of 2 Bedroom House and Source of
Financing
5.3.3. Land Acquisition Challenges
Several complaints of land acquisition have been raised over the years. This research decided
to ask respondents which of the challenges they perceived to be the most frustrating. The
options were compiled based on experience of the researcher and interaction with several
people over the years. An option was however, left for respondents to also add, in their view
any other challenge they may consider to be the most challenging. Responses gathered showed
that a large number (38%) blamed land owners for their dishonesty in the sale of lands. 24%
of the respondents also fell that regulations guiding the purchase of land in Greater-Accra was
very poor. 21% of the respondents felt the lack of a proper register of lands showing who the
original owners and size of land owned was a big issue. 8% of them felt that the cost of land
38
was a major hindrance. This was not surprising since in a question posed to them about whether
land should cost the same everywhere, 92% believed that it should not whilst incidentally, 8%
felt land should cost the same everywhere. 2%, representing those who filled the other option
believed that all the five options were equally problematic. The pie chart below gives a pictorial
view of how the 331 respondents responded to this question.
PERCEIVED LAND ACQUISITION CHALLENGES
2%
8% DISHONEST LAND OWNERS
38% NON-REGISTRATION OF LANDS

24%
LACK OF FULL LAND OWNERSHIP
REGISTRY
POOR LAND PURCHASING
21% 7% REGULATIONS
COST OF LAND
Other (Please Specify)
Figure 11: Perceived Land Acquisition Challenges
5.4. Other Findings
This section discusses other findings gathered from the response which are relevant to this type
of study and provides further insight into the perceptions and opinions of the respondents with
respect to the topic.
5.4.1. Knowledge in building construction
In order to understand why respondents answered subsequent questions, there was a need to
try and measure how well they understand the building construction industry. A rating question
39
was asked for respondents to personally gauge themselves on how they felt they understood
the industry. A Very Good rating was for those who were actually in the industry and knew
the nitty gritty of the industry. A Normal rating meant the person understood the basics of
what goes into construction, like prices of cement, iron rods and basic building materials. A
Very Poor rating meant the person was completely oblivious to what even went into
constructing a house.
The pie chart below shows how respondents rated their knowledge in construction. Almost half
of the 331 respondents felt they had basic knowledge in construction adding up to over 75% of
them having an average to excellent knowledge in construction. This generally shows that most
of the responses given can be relied on.
BUILDING CONSTRUCTION KNOWLEDGE

VERY POOR VERY HIGH
POOR 2% 10%
12%
HIGH
28%
NORMAL
48%
Figure 12: Building Construction Knowledge
5.4.2. Housing Selection Priority
5 key areas based on experience and interaction with people over the years were chosen to be
the factors that most home owners or potential home owners factored in their selection of the
40
house they want live in. These areas also key factors in determining the cost of houses. These
are:
Structural Stability: This refers to how solid and stable a house is with respect to external and
internal forces. The less susceptible a house is to collapse under intense loading, strong winds
or earth quakes, the more stable it is structural. This is achieved through the employment of a
structural engineer and structural design of buildings per specifications determined by the
engineer.
Room Spaces: This is the amount of space allocated to various rooms of a house including the
number of rooms. The larger the room spaces, the bigger the house, the more expensive it
becomes
Material Used: Due to technological innovation, various type of materials has been developed
and approved worldwide for the construction of homes. Some of these materials include
concrete, clay, wood, bamboo, steel and even plastics. The choice of primary materials for a
house has serious implications of the cost of that house.
Aesthetics: This refers to the architectural beauty of a house, both externally and internally.
Some homes owners prefer to use more beautiful and stylish materials to finish up their homes
to attract a certain class of buyers.
Security: Security of a home against burglary, fire and other forces is also considered by some
as very important. Since shelter is meant to protect oneself from external elements, it is
necessary to consider the security of house.
The chart below shows which factors are of utmost importance to respondents. Structural
stability was considered more important to 36% of them with aesthetics being the least
41
important with only 5% opting for that. This can be interpreted as that people consider
aesthetics as luxury and can easily do away with saving them money in acquiring their houses.
PRIORITY IN HOUSING SELECTION
STRUCTURAL ROOM SPACES

STABILITY 28%
36%
AESTHETICS
5%
SECURITY
MATERIALS
15%
USED
16%
Figure 13: Priority in Housing Selection
5.4.3. Home Ownership Status
The study also decided to find out how many of the respondents either owned a house or were
currently renting. 251 representing 76% were renting whilst 80 respondents being the
remaining 24% were occupying their own homes.
42
HOME OWNERSHIP STATUS
24%
Own House
Rented
76%
Figure 14: Home Ownership Status
5.4.4. Preferred Cost of Two Bedroom House
Respondents were also asked about how much they will wish they could pay for a standard 2-
bedroom housing unit. 184 of the respondents representing 56% wished to purchase a 2-
bedroom house for between 50,000 and 80,000. 88 respondents also felt between 80,000
and 100,000 seemed more realistic and within their reach. 33 respondents also thought that a
price of between 100,000 and 120,000 was acceptable and 26 did not mind paying over
120,000 for a 2-bedroom house.
Figure 15 gives a pictorial view of how respondents answered the question on how they would
want to purchase a 2-bedroom house.
43
PREFERRED COST OF 2-BEDROOM HOUSE

120,001 AND
ABOVE
100,001 -
8%
120,000
10%
50,000 - 80,000
80,001 - 56%
100,000
26%
Figure 15: Preferred Cost of 2-Bedroom House
The research further decided to draw a link between how much respondents wanted to purchase
a 2-bedroom house to how much they earned. The bar chart in Figure 15, gives a distribution
between the salaries and preferred cost price option.
The bar chart, interestingly, but not surprising showed that the respondents choices were mostly
driven by their incomes. Majority of those who earned below 4,000 wanted the option of
buying a house for less than 80,000. For those earning 4,000 and over their responses didnt
seem to be so vast although majority want to purchase a house for between 80,000 and
100,000.
44
COMPARISON BETWEEN SALARY AND EXPECTED COST

OF HOUSE
50,000 - 80,000 80,001 - 100,000 100,001 - 120,000 120,001 AND ABOVE
70
62
60 56
50
40 34
30
21 20
19
20 14 14
11 10 12 11 11
10 7 6 7 7
4
2 1 1 0 1
0
0
500 AND BELOW 501 - 1,000 1,001 - 2,000 2,001 - 4,000 4,001 - 6,000 6,001 AND
MORE
Figure 16: Link between Salary and Expected Purchase Price of 2-Bedroom House
5.4.5. Preferred Cost of Land
Respondents were asked to choose which cost range, they were willing to purchase a standard
plot of land for. 28% of respondents wished to buy land for between 4,000 and 7,000 whilst
some 23% wanted to purchase land for 7,000 to 10,000. The remaining 27% did not mind
purchasing a plot of land for more than 10,000.
45
PREFERRED COST OF PLOT OF LAND
10%
23% 1,000 - 4,000
17% 4,001 - 7,000
7,001 - 10,000
10,001 - 15,000
22% 28% 15,001 AND ABOVE
Figure 17: Preferred Cost of One Plot of Land
A relationship between how much income respondents earned and what they wanted to
purchase land was deduced. Figure 18 shows that majority of the respondents who feel between
the income range of 1,000 and 4,000 preferred to purchase land costing between 4,000
and 7,000. However, a sizeable number of those who earn above 4,000 preferred to purchase
land costing more than 7,000.
RELATIONSHIP BETWEEN SALARY AND PREFERRED

COST OF LAND
1,000 - 4,000 4,001 - 7,000 7,001 - 10,000 10,001 - 15,000 15,001 AND ABOVE
40 36
35 30
30 28
25 22
19 19
20 15 16 15
15 13 13
1111 10 10
8 9 9
10 6 6 6
3 3 4
5 1 0 2 3 2 1
0
500 AND 501 - 1,000 1,001 - 2,000 2,001 - 4,000 4,001 - 6,000 6,001 AND
BELOW MORE
Figure 18: Relationship between Income and Preferred Cost of Land
46
CHAPTER SIX
SUMMARY, CONCLUSION AND RECOMMENDATIONS
6.1. INTRODUCTION
This chapter presents a summary of findings and conclusion drawn from the data presented
from the research and provides recommendations on how best housing can be made to meet
the needs of the end-user. Although the focus of the conclusion will be based on the objectives
of this research, other conclusions and recommendations will be made to provide extra
information in solving the nagging issue of affordable housing.
6.2. Key Findings
6.2.1. Lack of Trust in Real Estate Companies
From the analysis, it is obvious that many people do not have a lot of trust in the houses
constructed by real estate companies. This perception can be linked to the fact that majority of
the respondents considered structural stability as their topmost priority as well as materials
used. People believe that most real estate companies prefer to use cheap material and do not
focus so much on the structural soundness of the building as some put up houses at a fast pace
which sometimes gives cause for concern. People also believe real estate companies charge
more than what they should charge therefore making supernormal profits. With this perception,
many feel real estate companies are cheats and that building according their own tastes will be
cheaper.
Many of these companies also advertise very juicy lands and houses being for sale and
sometimes cloak it in the form as service plots but after sales, clients complain of various issues
of obligations which the agents fail to fulfil.
47
6.2.2. Residents prefer to finance home purchase and construction personally
The analysis also shows that many people prefer to finance their home acquisition from their
own pockets. A huge number is skewed to this option. Generally, across the entire salary scale,
many respondents feel that financing on their own is cheaper. This can be deduced from the
fact that mortgages in Ghana are pretty much expensive as well as having to make a down
payment of at least 20% of the cost of the house. Many respondents also fall outside the salary
range or are just on the fringes of being eligible for a mortgage. People feel that with what they
earn, it is less prudent to go into a debt which is a serious burden or liability as they will have
to make monthly payments of about 30% of their income, without factoring any other
deductions like utilities payment, food and clothing as well as transportation.
Using a mortgage calculator on www.hfcbank.com.gh, a 30-year-old worker earning a net
income of 4,000 and wanting to purchase a house costing 120,000, will need to make a
down payment of 40,000 to qualify for a loan of 80,000 at a rate of 29% for 20 years. This
means he will have to make monthly repayment of 1,940 for the next 20 years which is about
48.5% of his monthly income. With such deductions, many people will not opt for mortgage
but will rather choose to take their time to build their own home knowing there is no pressure
to honour debt obligations.
6.2.3. Land Tenure System in Ghana is very terrible
The research shows that the land tenure system in Accra must be seriously looked at. People
believe that dishonesty of land owners are the biggest problem potential house owners
encounter, as well as the lack of a proper registry of land ownership and poor enforcement of
regulations.
48
In Accra, there are issues of land disputes and misrepresentation of land owners by fraudulent
individuals. Many lands are owned by families from various Ga clans, but unfortunately, there
is no register to show who the go-to person is when enquiries are made about land available
for sale. As such, potential land buyers end up paying for a house more than once, since the
money does not go the original owners. Some also get attacked by land guards and must spend
a lot of money and time in court to settle the dispute.
6.2.4. Residents want affordable houses but do not think affordable
In the study, majority of respondents were highly skewed towards buying a standard 2-bedroom
house for below 100,000. This was not surprising due to the various income levels which
makes them believe houses costing below that amount should be affordable to them. However,
and interesting trend was seen when most residents preferred their affordable houses be built
purely from cement which can be linked to the choice of them considering structural stability
to be the most important property for their buildings. This can be from the linked to the
perception that cement is a very strong material and that the more cement in a building, the
more stable it will be. However, what many residents so not know is the structural properties
other building materials have, as majority of the respondents said they had an average
knowledge of the construction industry. Hence most do not know that it is possible to equally
use other materials like clay and bamboo and make so much savings in construction cost and
long term expenses especially on energy.
6.3. Recommendations
This report would like to make the following recommendations for policy makers and all
stakeholders within the housing industry to take note of, based on the findings made so far.
49
Firstly, more research should be conducted in alternative building materials other than cement.
Research has shown that clay bricks are very cheap and readily available due to the large clay
deposits in the entire country. Government should encourage the use of clay bricks as they are
cheaper than cement blocks and introduce them as part of the various affordable projects. The
country also has a very huge untapped bamboo resource which can be used to replace wood as
bamboo culms are cheaper and possess compressive strengths higher than wood (Bharla et al,
2009). Government and building professionals should lead by example and educate the
populace on the need to look at alternative building materials. This will help reduce perceptions
about the other materials that people try to avoid when wanting to build a house. This means
more research needs to be done in local building materials as substitute for materials which are
imported and end up spiking the price of houses.
Secondly, alternative and convenient housing finance models should be introduced. Much more
affordable mortgages should be made available for certain incomes who will be outpriced by
the conditions for being eligible for mortgage. Banks should realise that real estate are long
term investments and that owners need a longer term to be able to repay their loans for their
houses. Cooperative Unions in Ghana can adopt systems practiced in other countries like
Nigeria, whereby they provide soft loans for members who need assistance in building their
homes.
The Survey department, as well as the Lands Commission should also have digitized, up-to-
date site plans and maps of lands, well demarcated showing the land registration numbers and
all owners of the land. This registry should be made available for interested and prospective
land owners who seek to make a search on lands they wish to purchase. This will mean that, it
should be compulsory for all land owners to register their lands with government or forfeit it
50
to the state, who then takes custody of the land. With this, they can easily find out who owns
the land and pay the right price to the right person.
The Government through the Metropolitan, Municipal and District Assemblies, should ensure
that potential residential areas are serviced with roads and drains and utilities. Many housing
developments are located in areas which have no access roads good quality drainage as well
utilities. If the government provides these infrastructure, developers can comfortably put up
houses and will not consider the cost of these infrastructure in the cost of the houses they intend
to sell and make them more affordable.
51
REFERENCES
Adjei, K. O.1, Fobiri, G.2, Owiredu, G. K.3 (2015) Policies and Barriers in The Provision of
Affordable Housing in Ghana. African Journal of Applied Research. (AJAR) Journal, Vol.1,
No.1 ISSN 2408-7920 January 2015, Cape Coast, Ghana. 159-169
Avanitis, Y, 2013. African Housing Dynamics: Lessons from the Kenyan Market. African
Development Bank. Africa Economic Brief, Chief Economist Complex | AEB Volume 4,
Number 3, 2013.
Bank of Ghana, 2007. The Housing Market in Ghana, pp 2, 6, 28.
Bhalla, S., Gupta, S., Puttaguna, S. and Suresh, R. (2009), Bamboo as Green Alternative to
Concrete and Steel for Modern Structures, Journal of Environmental Research and
Development, accepted.
Boamah, Nicholas Addai, (2011),"The regulatory environment and housing finance market in
Ghana", Property Management, Vol. 29 Iss 5 pp. 412 - 415
Centre for Affordable Housing Finance (CAHF), 2015. 2015 Yearbook, Housing Finance in
Africa: A review of some of Africas housing finance markets. Pp 97, 98
Chen, J., Hao, Q. & Stephens, M., (2010). Assessing Housing Affordability in Post-reform
China: A Case Study of Shanghai. Housing Studies, 25(6), pp.877901.
CHF International, 2004. Strategic Assessment of The Affordable Housing Sector in Ghana.
European Central Bank, 2009. Housing Finance in The Euro Area, March 2009, Structural
Issues Report. PP 11 19.
52
Ghana Statistical Service, (G.S.S.), 2012. 2010 Population and Housing Census, Summary
Report of Final Results. Sakoa Press Limited. PP XIV
Ghana Statistical Service (GSS), 2008. Ghana Living Standards Survey Report of the 5th
Round. PP 64
Ghana Statistical Service (GSS), 2014. Ghana Living Standards Survey Report of the 6th
Round.
Hoskins, S. M., Jones, K and Weiss, N. E., March 2013. An Overview of the Housing Finance
System in the United States. Congressional Research Service.
Kumar, Ranjit, 2011. Research Methodology; a step-by-step guide for beginners. 3rd Edition.
Sage Publications Ltd.
Ministry of Water Resources, Works and Housing, 2015. National Housing Policy. Pp v, 1.
Neville, Collin, 2005. Introduction to Research and Research Methods, Bradford University,
School of Management
Nkyi, B. A. and Dinye R. D., 2013. Accessibility to Real Estate Finance In Ghana: Policy
Directions For Stakeholder Engagement In The Construction Industry. International Journal
of Economics, Business and Finance Vol. 1, No. 3, April 2013, PP: 35 - 52,
Oyewole, M. O. (2010),"Housing development finance through cooperative societies",
International Journal of Housing Markets and Analysis, Vol. 3 Iss 3 pp. 245 255
Poon, J and Garratt, D. (2012),"Evaluating UK housing policies to tackle housing
affordability", International Journal of Housing Markets and Analysis, Vol. 5 Iss 3 pp. 253 -
271
53
The Supreme Military Council Decree (SMCD 23), 1985. The Home Mortgage Guarantee
Scheme.
Williams, P. and Whitehead, C (2015). Financing Affordable Social Housing in The UK;
Building On Success?. Housing Finance International: The Quarterly Journal of the
International Union for Housing Finance. Pp 14 19.
World Bank and DRC, (2013). China 2030: Building a Modern, Harmonious, and Creative
High-Income Society, Washington, D.C.: The World Bank
Yang, Z. & Shen, Y., (2008). The affordability of owner occupied housing in Beijing. Journal
of Housing and the Built Environment, 23(4), pp.317335.
Yang, Z. & Chen, J., 2014. Housing Affordability and Housing Policy in Urban China, Berlin
and New York: Springer.
Yirenkyi J. N., 2014. Urban Housing Supply Challenges and Implications For Affordable
Housing In Accra.
54
APPENDIX
QUESTIONNAIRE SAMPLE
THIS QUESTIONNAIRE IS DESIGNED TO INVESTIGATE PERCEPTIONS ON
HOUSING AFFORDABILITY AND THE CHALLENGES POSED IN ACQUIRING
SUITABLE ACCOMODATION. INFORMATION WILL BE TREATED AS
CONFIDENTIAL AND ANONYMOUS
1. AGE CATEGORY (PLEASE TICK ONE)
18 - 25
26 - 35
36 - 45
46 - 60
61 AND OVER
2. AREA OF OCCUPATION
BANKING
TRADING, COMMERCE
ENGINEERING, ARCHITECTURE, CONSTRUCTION
EDUCATION, TEACHING
GOVERNMENT SECTOR
UNEMPLOYED
OTHER (PLEASE SPECIFY):
55
3. AVERAGE MONTHLY INCOME BRACKET
500 AND BELOW
501 - 1000
1001 - 2,000
2,001 - 4000
4001 - 6000
6001 AND MORE
4. HOW WOULD YOU RATE YOUR KNOWLEDGE ABOUT THE HOUSING
SECTOR?
VERY HIGH
HIGH
NORMAL
POOR
VERY POOR
5. WHAT WILL BE YOUR TOPMOST PRIORITY IN SETTLING FOR A
HOUSE?
ROOM SPACES
AESTHETICS
SECURITY
MATERIALS USED
STRUCTURAL STABILITY
56
6. ARE YOU CURRENTLY LIVING IN YOUR OWN HOUSE?
YES
NO
7. WHAT HOUSING MATERIAL TYPE DO YOU PREFER MOST FOR YOUR
HOUSE?
CEMENT BLOCK HOUSE
CLAY BRICK HOUSE
CONTAINER FABRICATED HOUSE
WOOD BASED HOUSE (EG. BAMBOO
8. WHICH DO YOU PREFER?
BUILD YOUR OWN HOUSE
PURCHASE FROM A REAL ESTATE AGENT
PLEASE STATE YOUR REASON BELOW:
9. WHAT IS YOUR IDEAL LOCATION FOR A HOUSE?
CITY CENTRE
SUB-URBAN AREA
PERI-URBAN AREA
RURAL AREA
10. HOW MUCH WOULD YOU LIKE TO SPEND ON LAND ACQUISITION?
57
1000 - 4000
4001 - 7000
7001 - 10,000
10,001 - 15,000
15,001 AND ABOVE
11. WHAT IS YOUR PERCEPTION ABOUT LAND ACQUISITION IN ACCRA
VERY FLEXIBLE
FLEXIBLE
NORMAL
STRESSFULL
VERY STRESSFUL
12. WHAT IS YOUR IDEAL SOURCE OF FUNDING FOR HOME
ACQUISITION?
BANK FINANCING(Mortgage)
PERSONAL SAVINGS
13. DO YOU BELIEVE THAT LAND SHOULD COST THE SAME
EVERYWHERE?
YES
NO
14. WHAT DO YOU CONSIDER AS A MAJOR CHALLENGE IN LAND
ACQUISITION?
DISHONEST LAND OWNERS
NON-REGISTRATION OF LANDS
58
LACK OF FULL LAND OWNERSHIP REGISTRY
POOR LAND REGULATIONS
COST OF LAND
15. LOOKING AT YOUR MONTHLY INCOME, HOW MUCH WILL YOU
IDEALLY, WANT TO SPEND ON A 2 BEDROOM HOUSE?
50,000 - 80,000
80,001 - 100,000
100,001 - 120,000
120,001 AND ABOVE
59

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UNIVERSITY OF GHANA

UNIVERSITY OF GHANA BUSINESS SCHOOL

HOUSING COST, FINANCING AND AFFORDABILTY IN ACCRA

NANA SARPONG AGYEMAN-BADU

THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON

IN PARTIAL FUFILMENT OF THE REQUIREMENT FOR THE AWARD OF

MASTER OF BUSINESS ADMINISTRATION (FINANCE)

Nana Sarpong Agyeman-Badu Prof. Joshua Abor

financially to undertake this programme.

this point, I say God bless you all.

331 respondents answering various questions relating to their incomes, preferences on

good purchasing agreement terms with land owners.

Table of figures ......................................................................................................................... ix

CHAPTER ONE ........................................................................................................................ 1

1.1. Research Background .................................................................................................. 1

1.2. Research Problem ........................................................................................................ 2

1.3. Research Purpose ........................................................................................................ 3

1.4. Research Objectives .................................................................................................... 4

1.5. Research Question ....................................................................................................... 4

1.6. Significance of Research ............................................................................................. 4

CHAPTER TWO ....................................................................................................................... 6

LITERATURE REVIEW .......................................................................................................... 6

2.1. Introduction ................................................................................................................. 6

2.2. Housing Financing Scheme in the United States of America ..................................... 6

2.4. Housing Financing Scheme in the Euro Area ............................................................. 8

2.5. Housing and Housing Financing Overview in Kenya ............................................... 10

2.7. Other Housing and Housing Financing Elsewhere ................................................... 14

2.7.1. Mexico ............................................................................................................... 14

2.7.2. China .................................................................................................................. 14

2.8. Chapter Summary...................................................................................................... 15

CHAPTER THREE ................................................................................................................. 17

OVERVIEW OF HOUSING FINANCE IN GHANA ............................................................ 17

3.1. Introduction ............................................................................................................... 17

3.2. Stock of Houses ......................................................................................................... 19

3.3. The Housing Finance Regulatory Framework .......................................................... 20

3.3.1. The Mortgages Decree 1972 (NRCD 96) .......................................................... 20

3.4. Chapter Summary .............................................................................................. 24

CHAPTER FOUR .................................................................................................................... 26

4.1. Introduction ............................................................................................................... 26

4.2. Research Design ........................................................................................................ 26

4.3. Population of Study ................................................................................................... 27

4.4. Sampling Size and Technique ................................................................................... 27

4.5. Data Collection Method ............................................................................................ 28

4.6. Limitations ................................................................................................................ 28

4.7. Ethical Considerations............................................................................................... 28

CHAPTER FIVE ..................................................................................................................... 29

ANALYSIS AND DISCUSSION OF RESULTS ................................................................... 29

5.1. Introduction ............................................................................................................... 29

5.2. Demographic Information of Respondents ............................................................... 29

5.2.1. Age Range .......................................................................................................... 29

5.2.2. Area of Occupation ............................................................................................ 30

5.2.4. Current Housing Status of Respondents ............................................................ 32

5.3. Main Findings ........................................................................................................... 33

5.3.1. Preferred Choice of Home Ownership and Building Material .......................... 33

5.3.2. Preferred Financing Option................................................................................ 35

5.3.3. Land Acquisition Challenges ............................................................................. 38

5.4. Other Findings ........................................................................................................... 39

5.4.1. Knowledge in building construction .................................................................. 39

5.4.2. Housing Selection Priority ................................................................................. 40

5.4.3. Home Ownership Status .................................................................................... 42

5.4.4. Preferred Cost of Two Bedroom House............................................................. 43

5.4.5. Preferred Cost of Land ....................................................................................... 45

CHAPTER SIX ........................................................................................................................ 47

SUMMARY, CONCLUSION AND RECOMMENDATIONS .............................................. 47