Affordable housing: A catalyst for financial security in Ghana

It is broadly agreed that housing affordability is when households spend no more than 30% of their income on housing costs. Acknowledged as a fundamental human right by the UN, affordable housing offers more than just shelter. It has the potential to enhance financial security, as witnessed in countries like Singapore, Austria, Sweden, Canada, and the Netherlands, known for their successful affordable housing programs.

The housing deficit in Ghana, estimated at 1.8 million homes based on the 2020 Ghana Statistical Service (GSS) population census, has led to a surge in housing demand, subsequently driving up housing prices and rentals. This scarcity of affordable housing options has created immense challenges for the working class, rendering them unable to rent, construct, or buy homes. Research by Ameh & Osafo in 2020 highlights the exclusivity of the formal real estate market in Ghana.

The housing available through this market is financially out of reach for most households, with only approximately 1% capable of affording the least expensive homes offered by formal developers. Furthermore, mortgage institutions impose
stringent loan requirements, including a 30% deposit, 50% monthly mortgage payments, and a 10-year mortgage term, which significantly impedes the prospects of homeownership for most low-income households, and instead worsens their financial situation. But how can the provision of affordable housing boost financial security in Ghana?

Lower expense burden: Affordable housing ensures that a smaller percentage of a household's income is spent on housing expenses. For instance, if housing costs are limited to, say, 30% of income instead of the over 50% currently, families will have more disposable income to save or invest in education and small entrepreneurial ventures.

Improved educational outcomes: Stable housing environments allow children to attend school regularly, leading to better academic performance. Families residing in affordable housing are less likely to face frequent relocations due to unaffordable rents, ensuring continuity in education and increasing the chances of children breaking the cycle of poverty through education.

Homeownership opportunities: Affordable housing schemes that facilitate homeownership will enable Ghanaians to build equity over time. For example, through mortgage programs with reasonable interest rates, families can invest in property, which appreciates, becoming an asset that contributes to long-term financial stability.

Elevate employment accessibility and economic opportunities: Living in affordable housing near job centers facilitates easier access to employment for residents. For instance, strategically planning affordable housing developments in burgeoning economic zones or urban centers like the Ministries, Osu, Airport Residential Area, etc., allows residents to minimize commuting expenses and time, thereby enhancing their job opportunities and potential earnings.

Recently, some employees faced job loss due to the challenge of covering
transportation costs to and from work using their salaries—an issue that could be mitigated if affordable housing options were available closer to these economic zones.

The shared elements within the housing policies of the aforementioned five successful affordable housing nations include robust social housing programs, where residents live in subsidized housing, regulated private rental markets and strong tenant protection, public-private partnerships, land-use regulations, and incentives for private developers to build affordable housing.

By integrating these strategies or enforcing existing ones, Ghana can harness the power of affordable housing to drive financial security and alleviate poverty, promote economic stability, and foster inclusive growth that benefits all segments of society.