Land and Property Markets in Ghana A discussion paper prepared by the Royal Institution of Chartered Surveyors for presentation at the 2006 World Urban Forum by Callistus Mahama (Kwame Nkrumah University of Science and Technology, Ghana) and Adarkwah Antwi (University of Wolverhampton, England) This study was prepared as part of a series of studies organised by the International Housing Coalition (IHC) for presentation at the World Urban Forum III to be held June 19-23, 2006 in Vancouver, Canada. It is the intention of the Royal Institution of Chartered Surveyors (RICS) that the paper contribute ideas and review the results of experience to assist in the search for solutions to the problems of housing low- income families and slum dwellers around the world. RICS subscribes to the goal of “Housing for All” as an essential element to ending poverty throughout the world. RICS 12 Great George Street London SW1P 3AD UNITED KINGDOM www.rics.org Our grateful thanks to Homeless International for providing the photographs for the front cover. Details of the work of Homeless International can be found at www.homeless-international.org Land and Property Markets in Ghana Introduction The operations of the land and property markets are largely informal. That is, most transactions take place outside a formal registration process and the operations of the land and property markets are not regulated or transparent. As a result there is considerable confusion and differences in transactions and the value and methods of payment used to buy and sell land and property. Less than 10 percent of land allocations made by customary owners are registered. Government participation in the land market is minimal, compared to the position it played in the postcolonial period. The Tema Development Corporation (TDC), State Housing Corporation (SIC) and the Social Security and National Insurance Trust (SSNIT) are the only public sector agencies involved in the land market. Recently, the Ghana Real Estate Developer Association (GREDA) and some private developers have played an active role in land development, mainly servicing the upper income and expatriate demands for land and housing. The uncertainty that surrounds the use, development and title to land, with a reported 80,000 legal cases involving disputes on the title to land in urban Ghana (Mahama, 2004), has resulted in great uncertainty in the urban land markets. Consequently, there is a high risk factor being built into prices for land, with buyers prepared to pay a premium for land where security of tenure is likely not to be challenged (Migot-Adholla et al, 1994, & Mahama, 2004). Housing, like food and water, is a basic need and a necessity for the existence of man; the need for individual families to acquire their own private accommodation which they can call home, cannot be over-emphasised. A nation’s labour force is enhanced and further developed if it has a safe, decent and affordable means of accommodation. In the belief that ‘adequate housing’ is a basic human need, the United Nations General Assembly unanimously adopted a resolution proclaiming 1987 the International Year of Shelter for the Homeless (Tshipinare, 1987). The challenge confronting city dwellers in terms of accommodation is enormous. Most residents of cities and large towns in Ghana encounter serious accommodation problems as they desperately look for decent and reasonably priced houses to rent. The purpose of this study is therefore to assess the prevailing land and property markets in the country using secondary information from both published and unpublished materials. 1 Income and Access to the Land Market. Current land prices in Accra prohibit about 65 percent of the population from entering the housing market. Land values, for instance, in East Legon, a suburb in the capital, are between $40,000 to $60,000 per residential plot with serviced lands in Tema selling for about $15,000 to $18,000 per plot. In Kumasi, the second largest city, urban land prices range from $20,000 to $40,000 for unserviced lands close to major road networks (Mahama, 2004). The high cost of housing is caused by the price of land and high cost of utilities such as roads, water and electricity on such lands. The majority of Ghanaians spend more that 40% of their income on housing. The current minimum wage per day is 13,000 cedis and most Ghanaians in the public sector receive less than $100 per month. More than half of Ghanaians live on less than $1 per day1. A study conducted in 2004 in three urban cities, namely Accra, Kumasi and Tamale, showed that less than 5% of people living in these areas could comfortably service loans of about 50 million cedis in a ten year repayment period (Mahama, 2004). This was in 2003. More recent evidence suggests that the situation has gone from bad to worse. A university professor’s annual salary of about 70 million cedis may be barely adequate for an average size plot, even only in the peri-urban zone. The figure of $9000 (about 81 million cedis) is now being quoted as the minimum price of an affordable house under the low cost housing project by the government. Given the current minimum wage of 13,000 cedis per day, it will take someone on the current minimum wage 17 years to service the loan, excluding interest, and committing his or her entire salary to it. The State of Housing The report on the State of the Ghanaian Economy 2003 (ISSER, 2004) notes the lack of adequate financing, high lending rates, acquisition of land for large scale housing projects and high prices of land and building materials, as significant problems. The report draws specific attention to the issues of land in Accra. “Land litigation in Accra in particular impedes individuals’ effort in putting up their own residential units”. Ghana’s housing deficit stands at about 300,000 and it is estimated that about 1.2 million new housing units are needed by the year 2005. To achieve such a target, about 133,000 new housing units will have to be delivered annually. However, only 25,000 units are produced leaving an unsatisfied annual demand of 108,000 units,2 As a result, shift dwelling units such as kiosks, tents, cargo containers, or attachments to shops or offices serve as homes for 1.9 percent of the population, besides the 3 percent who are homeless 1 See the Ghana Poverty Reduction Strategy (GPRS). 2 See Housing Finance in Ghana-ghanareport.htm . 2 (Ghana living standards survey, 2000) and living on the streets. This appears to be a phenomenon in large city centres like Accra, Kumasi and Tema. The Housing and Population census conducted in 2000 3 indicates that the average household size in Ghana is 5.1 persons with about 4.5 households per house, and a total of 2,181,975 housing units nationwide. This is woefully inadequate because if every household of 5.1 persons were to have a separate unit of housing then all other things being equal, with a population of about 20 million then we will need a total of 3,708,250 housing units, a deficit of 1,526,275 units. More than 52 per cent of houses are estimated to have between two and four households living in them. Approximately 35 percent of houses have between 5 and 9 households. The average number of rooms in a house is 8. Most houses are constructed as compound houses, with multiple households using different rooms of the house. About 57 percent of houses in Accra are compound houses. Out of the 3,701,241 households recorded by the census, 2440 were identified as homeless. As much as 44.5 percent of dwelling units in the country are rooms in compound houses followed by separate or semi-detached houses of 40.6 percent. In the capital, 57 percent of houses are compound houses with an average of 17 persons per house (ibid). With such large numbers of compound houses, most households must share facilities such as toilet, bathroom and kitchen, which denies households the privacy they prefer. Ideally, the housing situation should be a minimum of a two-bedroom house per household4, certainly at present a luxury beyond the reach of many households. Families of about 5 persons and above are sharing one-room apartments. The census revealed that 38% of households have one-room apartments with 23.8% having two rooms. It is evident that most households have inadequate sleeping rooms, particularly when personal property and household chattels occupy a sizeable portion of the sleeping room. The housing stock in the country has not improved much over the years as it has been increasing by a slight margin whereas the housing deficit increases by substantial margins as seen in table below. 3 Herein called the census 4 Housing Needs Assessment, Ministry of works and Housing, 1990 3 Table 1: Housing Stock and Deficit. Year Estimated Total Estimated Estimated Households Housing Stock Housing Deficit 1960 - - 36,439 1970 351,953 152,573 199,363 1986 898,000 498,000 400,000 2000 1,910,325 895,049 1,015,276 2002 2,176,325 943,490 1,232,835 Source: 1960, 1970 & 2000 Population Census, HFC (2002) and MWH (1986) The Housing Market Most Ghanaians buy land for the purpose of constructing a building, a house, or developing a farm or some other enterprise. However, cultural tradition tends to look down upon the selling of property. The selling of property can imply to other Ghanaians that the owner is in debt or has had some other misfortune. The tendency is for Ghanaians to buy and hold property, then build a second dwelling and rent the first.