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Ghana's real estate sector is once again being battered by the falling value of the Ghana cedi against major trading currencies and rising import charges.

Speaking to Business Finder, Executive Secretary of the Ghana Real Estate Developers Association (GREDA), Sammy Amegayibor said the fall in the value of the cedi is badly affecting players in the sector because most of these companies price their homes in dollars or with the dollar as an index.

This, he noted, means that prices of homes have automatically gone up and that obviously affects sales.

Cedi depreciation

“When the dollar falls so sharply our major concern has been the mortgage market because a lot of people will need to qualify for mortgage at a particular price and when there is this depreciation of the cedi it therefore means that the qualification goes up automatically,” Mr Amegayibor added.

“If someone should qualify for a house at GH¢120,000, because of the current dollar exchange rate it might have gone up to GH¢125,000 and you would be surprise that just GH¢5,000 can disqualify someone from qualifying for mortgage and so it is a worry.”
One player in the sector, Director of Lakeside Estate, Alhaji Salah Kweku Kalmoni laments that his company is still counting its losses from the recent depreciation of the cedi.

“Anytime the cedi loses value it affects prices of homes. This is because 60 to 70 per cent of our inputs are dollarized. For example, tiles and electric cables, even roofing because the aluminium sheets that are used for making them are imported and so when the cedi depreciates it affects the prices of homes,” he indicated.

Port duties

High port charges is another reason for the recent recession in the real estate sector. Players in the sector have to pay duties as high as 20 per cent on imported goods to be used as fixtures, fittings and finishing.

“Because we buy some building materials, if prices are affected by import duties automatically the prices will go up, and some of us also directly import and so far as we are paying more for those services it will definitely affect production,” Mr Amegayibor lamented.
Alhaji Kalmoni agrees that: “The port charges are also not helping matters. It is not good for the sector. When port charges go up it makes it expensive and difficult for us to clear our goods.”

Challenges

According to the Executive Secretary of GREDA, marketing and sales for new homes have generally been very slow for most real estate companies.

“The real estate industry largely depends on surplus income; when people have sufficiently eaten and taken care of their kids and there is some surplus that is when they think of investing it in real estate and properties but when they themselves are unable to survive the issue of property is the least on their mind and that is reality,” Mr Amegayibor explained.
“It is always surplus income that triggers the mind to invest in something else but when your income is consumed by your expenditure it means that you are always in deficit and in the deficit mood you don’t think of investing in property.”

He said GREDA was hoping that the leaders of the country and policy drivers will look at the issues and find solutions for them.