Gov’t to cut housing cost by 40% for private developers – Works & Housing Minister
The Minister of Works and Housing, Francis Asenso-Boakye, has said the government will reduce the construction cost for private developers by 40% to cushion them in facilitating the realisation of the goal of affordable housing projects in Ghana.
The project is to help to bridge the country’s housing deficit of more than two million housing units and a supply requirement of about 200,000 units annually.
Meanwhile, the reduction of the construction cost, the minister has said, formed part of a developed framework to drive rekindle the affordable housing project and “further create the needed opportunity for the majority of the country’s urban population.”
“Through this [framework], the government commits to reduce up to 40% of the construction cost through the provision of land, infrastructural services and some tax incentives and exemptions in support of the affordable housing programme,” Mr Asenso-Boakye said.
Speaking at the launch of the Business 24 Real Estate Conference 2021 in Accra on Tuesday, October 19, the minister indicated that, “this, we believe, will be pivotal in addressing the supply side constraints of the housing market.”
Regarding the framework, he said, it was intended to use an appropriate mix of public and private sector investments that meet the needs and the financial capacity of the ‘average Ghanaian’.
Mr Asenso-Boakye noted that “the ministry has identified each of the components of cost drivers that contribute to the cost of an affordable housing unit and has mapped out specific strategies targeted at each of these with the sole objective of making housing affordable for the large section of the population.”
As such, the focus would be to look at the entire ecosystem when it comes to housing delivery, including local building materials and their impact on housing costs.
There will also be the provision of infrastructure through dedicated financing and synergies with other infrastructural sectors, as well as planning and design through the establishment of space standards to benefit from economies of scale and avoid wastage according to the minister.
The framework will also tackle the issue of repossession of public land and engagement with traditional leaders, emphasising on transportation linkages to these lands and taking advantage of the infrastructural services available.
Another consideration would be a sustainable and cheaper means of construction finance as well as long-term mortgage financing.
To this end, the sector minister said “the government has planned to scale up the National Housing and Mortgage Fund, which was piloted in 2020, to stimulate the demand side of the housing market and create more access to affordable housing for the low- to middle-income earners.”
He disclosed that the government was also “considering how prospective homebuyers could use their tier-two and tier-three pension funds, to support their mortgage, especially in the area of initial deposit.”
He also noted that “the Ministry of Works and Housing is poised to be the forbearer in the area of the use of local building materials for construction,” adding that the drive had arisen because of its attendant benefits of reducing construction cost in the long run.
“It is envisaged that every developer who wants to partner the government in our affordable housing drive, will incorporate the use of local building materials such as burnt bricks, compressed earth blocks, etc., in the construction of these affordable housing units.”
In his view, “such an initiative will go a long way to reduce building cost and ensure the provision of affordable housing while boosting the local economy.”
“Certainly, this model presents the opportunity to attract long-term and sustainable financing for the low- to middle-income earners without the government providing guarantees and off takers to attract private sector developers,” Mr Asenso-Boakye mentioned.
“Let me take this opportunity to urge all developers within the housing sector, to embrace this current framework of the government and partner with banks and other financial institutions to invest more in the provision of affordable housing where the housing deficit is prevalent.”
“In fact, the future of real estates in Ghana is in the provision of affordable housing and I want to urge all developers to come to that direction,” the minister added.
He said, “it is only through this that we can reach out to the majority of our citizens and positively affect the lives of the larger population.”
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