Many people wish to buy a home, a place you can call your own. However, the goal of having an affordable property to call your own for people in Accra is rapidly becoming a pipe dream.
But why do individuals still desire to live in Accra, despite Real Estate in Accra being so overpriced?
The answer is simple – not only because it is the capital city of Ghana. Accra has grown to become the commercial hub of Ghana.
It offers more job opportunities, better living conditions (due to the presence of social amenities) and is the administrative centre of Ghana.
So more resources are naturally spent developing the city, which has caused many people to relocate to the capital.
Real Estate in Accra is one of the fastest-growing business sectors of the Ghanaian economy.
Industry analysts believe that this is not surprising, given that the World Bank’s Global Economic Prospect study predicts that Ghana will have the fastest expanding economy in Sub-Saharan Africa in the coming years.
This analysis begs the question, why is the economy expanding and real estate prospering, but real estate is overvalued and expensive?
Is this a deliberate attempt to create artificial scarcity? Are the property owners purposefully exploiting people?
Is Accra’s land simply too expensive?
Without further ado, let’s look at why Real Estate in Accra is overpriced and expensive.
The odd nature of rentals in Accra
One of the reasons why Real Estate in Accra is overpriced and expensive in Accra is because renting in Ghana is a strongly pro-Landlord venture with little or no protection for the tenant’s interests.
When looking for a place to live in Accra, it is not unusual to be required to pay a rent advance of up to 12 months. The Rent Act, however, states that landlords can only charge six months’ rent in advance, with further monthly payments due every six months.
There are several reasons why landlords indulge in this behaviour, but it ultimately boils down to self-interest and the pursuit of long-term financial advantage.
It gets worse when the tenant wants to terminate their contract; the problem is that they must notify the landowners three months in advance, and who betides you if the rental period isn’t over by then.
You’d have to either bring in someone to cover the rest of the period until the advance is over or wait months on end for the landowners to come up with the rest of the advance.
Expensive cost of building materials
Another reason why Real Estate in Accra is overpriced is the nature of building materials. They are pricey. Building a house in Ghana has practically become a herculean effort due to the high cost of building materials.
Prices change and fluctuate from time to time as a result of the Ghanaian economy’s high rate of inflation.
This implies that the costs of products and services grow frequently and, sadly, fast.
In just two years, cement cost have jumped from around GH30.00/bag to almost GH50.00/bag.
That’s an annual rate of 29% and at that rate, the price of cement should be expected double every 2.5 years. It’s no wonder, then, that the price of real estate is growing exponentially every day.
Imported goods > local goods
The preferences of those purchasing homes have a big effect in the rise of real estate prices. The expanding nature and prestige of “city living” imply sophistication.
More individuals desire to possess houses made with contemporary materials, for example tiles; however, tiles are not manufactured in Ghana.
The bad news is that these manufacturers do not deliver goods immediately to the construction site.
Before bringing supplies into the nation, real estate developers must pay for the materials, transportation costs, and import tax.
Following that, the developer must ensure that the building supplies depart Tema’s port and are securely transferred to the construction site.
This goes the same for other imported building materials such as louvre blades, foreign doors, lamps and products that are not produced in Ghana.
By the time the purchase and delivery of all these are completed, the cost of the materials would have been several times the initial amount.
This trickles down to the overpriced nature of the real estate that we see.
If you want to read more about The Average Cost of Living in Accra, Ghana click here.
High land prices of real estate in Accra
Another factor contributing to the overpriced nature of Real Estate in Accra is the expense of purchasing land.
It is complex, overly bureaucratic, and expensive.
Aside from the purchase price of the land, you will also need to spend a large amount of money obtaining all of the necessary documentation and permits.
However, this does not ensure that you will not face legal action or that land guards would not attempt to keep you off your property.
A lot of money is spent in the process of acquiring legal certificates to make the property free of problems and keep encroachers at bay.
An unregulated Real Estate market
We cannot blame external reasons for the overpriced nature of Real Estate in Accra alone; the real estate sector is very uncontrolled in and of itself.
Several barriers exist that limit market entry, the most important of which being the expensive capital necessary to establish a real estate firm in Accra, hence the industry’s dominance by few firms. The real estate market is subject to little or no regulation.
This appears to be putting a price cap or floor in place to safeguard the interests of both customers and real estate developers, or subsidizing the cost of goods to relieve developers of unnecessary cost and lower buyer expenses.
This results to leaving the customers at the mercy of real estate developers, and leaving the developers at the mercy of ballooning costs.
All of these unresolved issues have converged to generate the dystopia known as overpricing, which house purchasers in Accra face.
Limited affordable housing options
Lastly, a contributory factor to the overpriced nature of real estate in Accra is due to the limited affordable housing options. Because of the concerns mentioned above that effect real estate prices, it discourages new investors from entering the market.
This reduces the availability of alternative affordable housing alternatives. You’re forced to settle for the pricier ones. Combine this with a market dominated by a few giants, a scarcity of alternatives, and individuals in need of houses at unregulated costs.
As a result, people succumb to these interplanetary prices. Naturally, demand will exceed supply, creating an ideal climate for real estate owners to raise the price in order to maximize profit.
The cycle continues indefinitely.
All of this contributes to Real Estate in Accra to be costly and expensive. There are solutions; the government must intervene to subsidize the cost of construction materials, as well as to regulate the real estate market and land tenure system.
The results will not be realized immediately, but they will be felt gradually, and people will be able to achieve their ambitions of living in beautiful affordable homes in Accra.
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