The price of renting a home is increasing along with the cost of living in Ghana. Many Ghanaians find it difficult to keep up with the rising costs as a result of the skyrocketing rental prices exacerbated bro by inflation. We examine how inflation affects Ghana’s rental market and offer suggestions on how to lessen its effects.
Simply put, inflation is an increase in the cost of goods and services over time, which can be caused by several factors including a decrease in supply, an increase in demand, or a combination of both. As prices rise, money becomes less valuable, which means that people need more of it to buy the same amount of goods and services. This affects all members of society and in particular those who are already struggling financially.
Inflation has risen steadily for years, leading to a dramatic spike in producer price inflation which peaked at 78.1% in November 2022 according to the statistics service and slowly retreated in December to 52.2%. The consumer price inflation accelerated to 54.1% in December year-on-year due to rising fuel, utilities, and food costs.
Affordability is an issue. It is not uncommon to see listings of between $1000 – $3500 (11500 GHS – 40200 GHS) a month for a two-bedroom furnished apartment in East Legon, Cantonments, and other prime locations in Accra. These rates are beyond the reach of many households where typical gross salaries range from 2000 – 5000 GHS ($175 – $434) a month. This means many of the sought-after apartments rely on the patronage of expats and seasonal travellers or sit empty for long periods of time – for months or even years. The underutilization of properties adversely affects landlords, who rather than owning assets that attract steady year-round revenues, end up managing liabilities that require them to fork-out funds for maintenance, security, and marketing fees.
Similarly, Ghana’s real estate developers find it increasingly difficult to sell properties on or off-plan to would-be buyers at home and abroad if the target market is overly reliant on a small non-domestic community of expats meaning a heightened risk of void periods.
How To Fix The Issue
There are several ways that authorities can address this issue and help reduce the burden on renters. The introduction of rent controls would limit how much landlords can charge tenants, but these would also have to bear in mind their right to receive fair compensation for their property.
Another possibility is tax incentives, such as reduced property taxes or grants for landlords who agree to lower their rental rates.
Finally, government-funded affordable housing programs for those who are unable to afford market-rate rents.
The sharing economy is one that tends to boom in times of strife and is one that gave birth to technology companies such as Airbnb. Much like in 2008 when Airbnb was founded, we are in turbulent economic times and the opportunity to reimagine how real estate and the rental market in Ghana is upon us.
The Ghana Market Research & Consumer Insights Hub is conducting a cost of living survey that aims to understand the lifestyle changes Ghanaians are making in response to high inflation and the rising cost of living. The findings of the survey will be used to inform policy decisions and help government and private sector organisations understand the needs and challenges of Ghanaian households.
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