In Africa and other continents, the failure to bridge housing
deficits has been hinged on many factors. One of such reasons is adequate
financing or access to funds by the prospective homeowners and developers.
In Ghana, Kenya and Nigeria, various statistics have revealed
the number of houses that must be built to accommodate the growing population.
Ghana’s housing deficit was projected to be 2 million in 2018 from 1.7 million recorded
in 2017. According to available statistics, making the affordable housing units
available and bridging the gap require about $34 million, while government must
build 190,000 to 200,000 units from 2018 till 2028.
Kenya’s deficit narrative
is similar to Ghana’s narrative. The country is short of 1.8 million housing
units in 2017 and estimated to be 2 million in 2018, exacerbated by an urbanisation
rate of 4.4%, equivalent to 0.5 million new city dwellers every year. In
Nigeria, there are different figures on the housing deficit from the government
agencies and professional bodies in the built environment. The figure has been
17 million, 20 million and over 22 million recently.
The difference in the
statistics being churned out has been linked to the absence of empirical data
to support the figure. According to an expert in the industry, the shortage is
affecting residents in the cities, “the available trend in the provision of housing units, by both public
and private organisations is unfortunately 70 per cent, 20 per cent and 10 per
cent in favour of high, middle and low income earners respectively.”
With
the rapid urbanisation in these three countries, demand for affordable housing
will remain strong within rental and purchase spaces in 2019. As pointed out
earlier, both the homeowners and developers are facing adequate finance
challenge. From the high tax rate on real estate industry to the huge mortgage
rate, affording houses remain elusive in these countries in 2018. There is five
percent Value Added Tax on real estates in Ghana. The rate is 16% on commercial
rental income in Kenya. In Nigeria, there are infrastructure tax, property tax,
education tax and IT tax. These are impeding investors from injecting capital
into property development.
From
the mortgage rate perspective, information has it that Ghana’s mortgage ratio
is 2% of GDP. Kenya’s
mortgage cost is six times higher than paying rent compared to South Africa,
where the ratio is one to one, making it one of the factors contributing to
Kenya’s low homeownership rates. Higher
mortgage interest also affected affordable housing provision in Nigeria.
Currently, mortgage banks charge between 19 and 24 per
cent.
In Ghana, a $ 10,000 house would cost $ 646/month, and 160,977 over the term, at an interest
rate of 33.0% over 20 years, assuming 20% deposit. This is affordable to 22% of the urban population. In Kenya,
a $ 10,000 house would cost $ 232/month, and 46,099 over the term, at an interest
rate of 14.0% over 15 years, assuming 20% deposit. This is affordable to 51% of the urban population. In Nigeria, a $ 10,000 house would cost $ 715/month, and 177,608 over the term, at an interest
rate of 36.0% over 20 years, assuming 20% deposit. This is affordable to 19% of the urban population.
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