An Empirical Study of Constraints on Housing Supply in Urban Ghana

Housing is a basic necessity of life. As a result of this, the severe housing supply problems experienced by most cities in the developing world are of utmost concern to governments and policy makers. The main focus of this study is to document the major underlying forces prohibiting housing development in Urban Ghana. We analyse both institutional and market-based constraints on the supply of housing. Using a purposive sampling technique, we surveyed CEOs of private real estate development companies within Accra and Tema with a Likert scale questionnaire to measure the severity of the factors hindering housing development in these areas. All the CEOs surveyed work for firms that are part of the Ghana Real Estate Developers Association (GREDA) and thus, have a good understanding of the constraints on housing development. The results show that real estate developers consider the supply problems in housing to be more driven by institutional factors than market forces. A large percentage of the CEOs report that land tenure arrangements, the lengthy procedure involved in securing building permits, the process of land acquisition and registration in Ghana are the major factors that significantly affect housing supply. The difficulty in accessing development funds, underdeveloped mortgage market, high interest rates are some of the market-based factors constraining housing development. Policy recommendations are proposed for a more effective and direct government intervention to improve urban housing supply.