Evaluation Of Equity Financing Option In Home Financing In Ghana

The benefits of mortgage to homeowners in the advanced economies have been well documented. Nevertheless, its importation into developing economies such as Ghana has been met with a marginal success. It can be said that the framework and the macroeconomic environment necessary for a vibrant and effective mortgage finance system is almost non-existent and will require a considerable period and much efforts for such anomalies to be corrected. It is therefore very expedient for Ghana, in her quest to effectively bridge the increasing housing deficit, to devote a proportionate attention to the peculiar needs of low and middle income earners to identify a more viable option that would satisfy the average Ghanaian. Data on the preferred housing finance system by both homeowners and prospective homeowners were sought from 81 randomly selected households in the Kumasi Metropolis.Findings of the study revealed the most widespread and preferred mode of financing housing to be from the builders’ own equity; which undoubtedly has resulted in piecemeal developments all over the country, many of which never see completion. The study however found many obstacles and fears encountered in this method of financing home construction. Chief among them is shortage of funds (equity) along the line of construction resulting from the general worsening economic conditions of the nation. Equity financing in piecemeal housing development may not be as effective as it should be for the majority of Ghanaians. The research concludes that rental housing options may be the solution to the housing needs of the majority of Ghanaians who are low and middle income earners.