Rehoboth Properties Limited becomes the first Real Estate Development Company to introduce Affordable Luxury Housing in Africa. The Affordable Luxury Project named Rehoboth City (Knightsbridge ) is located in Kwabenya, Accra. Kwabenya which is part of the Dome-Kwabenya Constituency, is the largest Constituency in Accra, Ghana.
Housing Evolution in Ghana
The housing industry in Ghana has experienced phenomenal changes over the years especially after gaining independence from Great Britain in 1957 (Amoako and Cobbinah, 2011). Before independence, the Department of Social Welfare and Housing was primarily responsible for the implementation of housing schemes. However, housing built through such schemes were provided only for colonial administrators, urban public, war veterans, and civil servants (Teye et al., 2013).
After independence many housing schemes operated by the state during the era were solely catered for public workers leaving the general citizens at large deprived of subsidised housing.
Under the schemes operating then, public workers had the opportunity to purchase the houses they lived in under very flexible payment plans.
By the 1980’s Housing then became of immerse concern for the state. This led to the establishment of Tema Development Corporation and the Social Security and National Insurance trust (Boamah, 2014). These two organisations set up were made responsible for all Real Estate Developments in the country. Today, it is the Ministry of Works and Housing that is in charge of housing in the country. Over the last two decades, the contribution from the state to housing has been very minimal. This is evident from the non-completion of all affordable housing schemes developed by the government.
The continuous growth in population as well as the movement of people from across the country to urban areas have played a critical role in housing shortage in the urban areas. This is because demand has not been matched with the relevant housing stock.
This situation of disproportionate population growth as against housing development has led to the current heightened housing deficit that the country faces with stands in excess of 2 million units
What is Affordable Housing?
Affordable housing is defined as housing which is priced in a way that aside the financial burden imposed for eg monthly mortgage payments, households can also be able to afford other basic requirements of life such as costs of living. Cost of living may include; education, medical care, transport, food, clothing etc.
Thus from the above, it becomes evident that, affordable housing is not just about the financial component involved in purchasing a housing unit (Squires and Hutchison, 2014), but other social and environmental factors which enhances the quality of life.
What is Affordable Luxury Housing ?
Affordable luxury housing is simply taking affordable housing to a whole different level by adding luxury to it without pricing it at it's true market value and also inclusion of amenities and facilities that enhances the quality of life.
In a nut shell Affordable Luxury housing can be viewed as for example " buying a Rolls Royce at Toyota Price "
How The Banks can help to play a Role
Many Commercial Banks within the country have not been interested in housing finance (Boamah, 2009). Their disinterest in financing housing is demonstrated by the lack of specific self-reliant departments within the banks which deal with mortgage financing (CHF, 2004). This is also supported from my primary research as many of the financial institutions claim that financing real estate is very risky due to the lack of reliable data on borrowers, high inflation rates cultural values, high default rates, depreciation of the cedi and the volatility of the economy. The above factors have increased the credit and liquidity risk for lenders as well as undermined mortgage financing by banks (Boamah, 2009 ; Beltas 2008).
This has led to the funding of real estate to become ‘no go’ area for financial institutions. Researchers claim that favourable rates of inflation and stability in interest rates can enhance the mortgage market positively (Teye et al.,2013). However in the case of Ghana, high inflation rates and depreciation of the currency makes it less appealing (Asare and Whitehead, 2015).
The Banks in Ghana can help in tackling the immense housing deficit, by providing very low rates of interest to developers and also to mortgagors.
According to an investigation carried by the United Nations (2005), Ghana abstains from
borrowing funds to invest in housing.
The policy lending rate from Bank of Ghana stands at 16% (BOG, 2019)
However, many of the financial institutions do not provide loans anywhere close to the rate.
As of April 2018, the bank lending rate; the average rate of interest charged on short term loans by commercial banks to companies stood at 34.5% ( Trading Economics, 2019).
From the information above, 34.5% interest rate represents more than double the Central Banks policy lending rate. Such high interest rates limits housing supply and makes borrowing to finance housing unfavourable.
Furthermore, most loan funds for housing, requires huge down payments, does depriving many low-income earners from obtaining loan facilities.
Government policies that have endeavoured to place lower-income earners at the centre of beneficiaries, most often have not been successful due to outflow of resources to people who do not qualify, duplication of names which constitutes corruption, and changes in government, were new government fail to continue with the existing policies of their predecessor (Stein and Castillo, 2005).
Provision of finance through mortgages is one of the most popular method of financing housing (Asare and Whitehead, 2006). This is because housing is expensive, and makes it very difficult for people to pay for the full price of a property at once (Leece, 2004). Mortgage involves advancing loans to potential homebuyers in order to support the purchase of a housing unit (Teye et al., 2013).
Ghana’s population growth is 2.15% annually, thus with the current population estimate at over thirty million people, it is expected that the yearly increase will be around 645,000. Such high rise in population growth means more demand for housing which implies increase in prices of housing as supply is unable to increase simultaneously to meet demands. Thus population growth is a barrier to affordable housing.
Nonetheless, increase in population will increase the demand for mortgage products (Asiedu, 2007).
However, the mortgage finance system is still not developed even though there exist great opportunities for development (Teye and Asiedu, 2015).
How the Government can help in the Provision of Affordable Housing
Land policies.
Land cost, aside construction cost is a very significant component in the delivery of
housing. In fact it is the most important cost when it comes to the delivery of housing
(Acheampong and Anokye, 2015). The cost of land can be controlled by the state as through
governmental policies, they can influence the supply of land, which intend can lead to either
an increase in price or a decrease in price depending on whether supply is increased or
reduced. More often, when lands are released by the government , they are released for profit
(Ibid, 2015). The profits gained are most channeled into other avenues other than housing.
Lack of effective policies and control , has fueled the shortages, distortions and drastic
increases in the land market .
Tax Waivers for Developers
one of the ways the government can play a role in making housing more affordable is the reduction of taxes or elimination of taxes for Developers. Elimination or reduction of taxes can help many Developers to be able to reinvest those funds into providing more units and also in being able to reduce housing prices. It is paramount that tax waivers are giving to the right developers who may be able to pass on the benefits to the public. The government’s role is significant in influencing affordable housing. Two main tools are available for the use by the government. These include Policy making and law (Asiedu,2007). Government expenditure and taxation are great examples of the tools that can be used to facilitate affordable housing. The eradication of the 5% Value added tax on property by the government in 2017 (Dailyguide, 2017) ,had a positive impact on housing affordability,, nonetheless many of the beneficiaries of such tax cuts were those of the upper class rather than low-income earners.
Policies can help in creating a good balance between the market forces that ensures fair
distribution of wealth. Also the creation of policies that will provide civic and basic
infrastructure will have a positive impact for increasing the construction of housing, as
currently many private developers as well as individuals are responsible for providing the civic and basic infrastructures which adds to the cost of housing (Asiedu, 2007). A good framework is also one of the few instruments available to governments to influence urban land and housing market and the investment decisions of private-sector developers (Payne and Majale,2004).
What Rehoboth Knightsbridge Offers
Setting up desirable housing in Ghana for most indigenes and those in the diaspora can bring its own set of unique problems. This is because the number of housing units needed to cater for the numerous households we have in Ghana in need of housing far out number the existing provisions. Government after Government over the years have tried to improve upon the situation by introducing a number of interventions including the popular affordable housing units.
The vision and aim for this project is to augment the efforts made by governments over the years to provide decent affordable luxury housing units to Ghanaians. Rehoboth Properties Limited has over the years developed and delivered to the Ghanaian Market, world class Gated Communities within the Accra Metropolis, targeted at the middle and high income earners in the society.
In recognition of the fact that majority of the citizens currently fall below the target market of Rehoboth Properties, the Kwabenya Affordable development project is a pride of the company. This is because Rehoboth Properties Limited is poised to deliver to the market the same standard and quality it has been delivering over the year in all its projects at a very affordable price to help many Ghanains to be able to afford a home/ Jump on the property ladder. In a nutshell Rehoboth Knightsbridge is offering you
" Rollsroyce quality at a Toyota Price" in regards to housing.