The Ghana Real Estate Developers Association (GREDA) has confirmed that there is a slight surge in the demand for mortgages.
This, according to the association, is most probably due to the scrapping of a five percent tax on real estates, as well as, a fairly stable cedi.
A recent Bank of Ghana report indicates that demand for loans for house purchases went up marginally from five to six percent between April and June this year.
The demand for mortgage had declined drastically in the last two years due to the high cost of houses amounting from the high exchange rate.
Houses that were sold for US$100,000 by the end of 2014 shot up to US$450,000 by the end of 2016, making it difficult for developers to sell their products to potential home owners.
But developers complained they could not do much about the prices due to the high cost of building materials most of which are imported. But GREDA is happy the trend is gradually reversing.
“From January till now, the impression I get from my members is that there is a slight surge in the interest for mortgage. People who came in 2015 and 2016 to make enquiries and did not come back have started coming in. So they are reviving the interest,” Executive Secretary of GREDA, Sammy Amegayibor said in an interview.
Amegayibor explained further, “I have a feeling the five percent tax, which was scrapped on real estate, has gone a long way to help. People who could not qualify for mortgage due to the tax difference, a year ago, now have higher purchasing power.”
The Central Bank’s latest report revealed that banks have reduced their loans for house purchases by about three percent, from eight percent to five percent as at June this year.
“There is a high default due to nonpayment of loans developers take from the banks because they are unable to sell their products. But there are good signs now and with the banks helping us to sell, I am sure things will get better,” Amegayibor added.
The sector has been hit by several challenges including poor financing options with prohibitive interest rates, high exchange rate and the high cost of building materials and construction.
Other challenges facing the housing sector include the complexity of land tenure system, cumbersome land registration processes, and poor infrastructural development especially in the city outskirts.
Banks that are currently on the mortgage market include Stanbic Bank, Fidelity, HFC, Cal bank and Ecobank.
<<Print>>