Market in Depth

Ghana's strong economic growth boost housing market

Lalaine C. Delmendo | September 05, 2021

Ghana's strong economic growth boost housing market After three years of strong growth, Ghana's high-end housing market is now struggling, as demand has been adversely affected by the COVID-19 pandemic and related restrictions.

“Sales transactions declined significantly as potential investors held onto their funds due to the financial crisis and the general uncertainties,” said Broll Ghana.

Before the pandemic, Ghana's residential property prices have been rising rapidly, thanks to robust local demand, as well as the influx of non-resident Ghanaians and foreign investors. “Prior to the pandemic, the real estate sector's contribution to GDP was robust due to growing transaction volumes and an increase in the supply of real estate assets,” according to Northcourt's Ghana Real Estate Market Report 2021.

“Most real estate transactions in the Ghanaian market are concentrated in Accra and Kumasi.”

However, the pandemic led to heightened health scares among potential buyers, and the imposition of travel restrictions has prevented foreign investors from coming into the country.

In January 2021, international tourist arrivals plunged 58.5% y-o-y to 36,838 people, following an almost non-existent tourism sector last year, according to figures released by Bank of Ghana.

Despite an expected economic rebound this year, the outlook for the high-end housing market remains gloomy, at least for the remainder of the year.

“Looking ahead, we anticipate that demand will continue to fall within the short to medium term especially for high-end apartments. This will be as a result of a decline in growth of Ghana's tourism industry which is the main driver of the high-end residential market,” said Broll Ghana.

After registering a meager growth 0.9% during 2020, Ghana's economy is expected to bounce back this year with forecast real GDP growth of 4.6% in 2021 and another 6.1% in 2022, according to the International Monetary Fund (IMF).

Ghana gdp per cap graph
There are no restrictions on foreigners buying property in Ghana. However, there are four forms of land ownership, some of which cannot be privately owned. Each involves differing modes of acquisition. These are: Government Land, Vested Land, Customary/Stool Land, and Family/Private Land.

Potential buyers should first consult the Ghana Investment Promotion Center regarding procedures, and to be directed to the appropriate agencies involved in legally acquiring property, since identifying legal ownership can be a problem.

Analysis of Ghana Residential Property Market »

Rental Yields

Yields in Accra, Ghana, are good at 8% - 11%

A 75 sq. m apartment would cost about US$200,000, and would rent for around US$1.750 per month, giving a gross rental yield of around 11%. Residential property prices are around US$2,200 per sq. m.

The rental market in Accra is relatively large with 37.5% of all households renting (only 22% for Ghana as a whole). Only about 40.4% of households in Accra claim ownership of their houses (57.4% for Ghana), while another 20.5% live rent-free (19.5% for Ghana). The remaining 1.6% of housing is employer-provided (4.5% for Ghana).

Property transaction costs in Ghana can be high, although in regional terms the total costs of buying and then selling a property are not unreasonable.

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Taxes and Costs

Rental income tax is low in Ghana

Rental Income: Rental income earned by residents from leasing residential properties is subject to a final withholding tax of 8% levied on the gross rent.

Capital Gains: Capital gains are taxed at 15%.

Inheritance: No inheritance tax is levied in Ghana. However, a 15% gift tax is imposed on the transfer of properties (or any right or interest in such) by way of gift.

Residents: Residents are taxed on their worldwide income at progressive rates, from 0% to 25%.

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Buying Guide

Ghana has a complicated titling system

Ghana homes for saleTotal round-trip transactions costs, i.e., the cost of buying and selling a property, range widely from 8.25% to 16% of the property price, due to the multiplicity of land titling issues. The seller pays the 5% real estate agent’s commission. The buyer pays the stamp duty ranging from 0.25% to 1%, and legal fees ranging from 3% to 10%.

Real estate transactions are negotiated and concluded in Ghanaian Cedi (GHC). English is the official language.

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Landlord and Tenant

1 - 3 years rent is paid in advance

Ghana luxury housesRental market practice in Ghana is pro-landlord.

Rent: Rents can be freely negotiated and rent increases are unrestricted. In practice, a landlord charges one to three years rent in advance, though according to the Rent Act, landlords can only charge six months rent in advance, with succeeding rental payments due every six months.

Pre-termination of Contract: If the tenant wishes to pre-terminate a contract, he must inform the landlord three months in advance. In most cases, the tenant must look for someone to take over the lease for the duration of the contract or wait for the repayment for months.

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Economy to strengthen, but public finances still weak

After registering a meager growth 0.9% during 2020, Ghana’s economy is expected to expand by 4.6% in 2021 and by another 6.1% in 2022, as global economic conditions gradually improve, according to the International Monetary Fund (IMF).

“The economic outlook is good in the short to medium term, contingent on an increase in demand for Ghana’s exports, improved business confidence, and successful implementation of the Ghana COVID–19 Alleviation and Revitalization of Enterprise Support program,” said the African Development Bank (AfDB).

Ghana inflation rate graph
The economy grew by an annual average of 6.6% from 2009 to 2019.

Ghana’s strong growth in recent years is primarily driven by its top three main export commodities – oil, cocoa, and gold. It is aided by the government’s various reforms, including trade liberalization, price deregulation, privatization, and the elimination of exchange rate distortions.

However, AfDB noted that the country’s ability to return to its pre-pandemic economic growth is constrained by burgeoning fiscal and debt risks.

Ghana’s budget deficit soared to 13.8% of GDP in 2020, a sharp increase from shortfalls of 4.8% in 2019 and 3.9% in 2018. The country aims to reduce the deficit to 10.8% of GDP this year, 7.5% in 2022 and below 5% by 2024.

Government debt reached 78% of GDP last year, sharply up from 63.9% of GDP in 2019.

The Ghanaian Cedi (GHS) continues to lose value against major currencies. During 2020, the cedi depreciated 6% against the US dollar, reaching an average monthly exchange rate of GHS 5.84 = USD in by year-end. The cedi has lost about 75% of its value against the US dollar over the past decade (2010-2020).

Likewise, the cedi depreciated by 8.9% against the British pound and by 14.4% against the euro from January to December 2020.

“The Ghana Cedi weakened as a result of a slowdown in the economy after most businesses were forced to shut down during the lockdown period,” said Broll Ghana. “Additionally, demand pressures from the Corporate and Energy sectors further weakened the Ghanaian Cedi.”