Housing Finance Strategies for Low-Income Households in Secondary Cities: Contextualization Under Customary Tenure in Ghana

ABSTRACT

High mortgage repayment-to-income ratios and unavailability of adequate and secured collateral are major setbacks for low-income households in accessing housing finance. This notwithstanding, few studies have examined housing finance strategies that are available to low-income households within a secondary city context amidst the complexities of customary land tenure. This study examined the housing finance strategies adopted by low-income households in Kumasi, Ghana and suggested alternative strategies under informal tenure. The mixed methods approach was adopted, using a survey of randomly selected households and semi-structured interviews of financial institutions. From the data analyses, the findings suggest that low-income households are priced out of formal mortgage markets, and hence they relied on the incremental building process. This approach is unsustainable and inefficient because it takes longer periods to complete, and such houses lack basic sanitary amenities. To mitigate the situation, there is the need for government social housing drives using cheaper and locally produced building materials as a long-term measure. In the short-term, urban poor can rely on rental housing options for their housing needs. There is also the need to create serviced neighborhoods in the peri-urban fringes of the city to supply cheaper and accessible housing parcels for the poor.

KEYWORDS:

• housing
• housing finance
• low-income households
• mortgage
• customary tenure

Acknowledgments

The authors would like to thank Mrs. Alberta Boam, who assisted in the data collection.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

David Adade

David Adade holds a master’s degree in land management and land tenure from the Technical University of Munich. His research interests include housing markets, real estate finance, land administration, customary land rights, and urban land governance.

Elias Danyi Kuusaana

Elias Danyi Kuusaana is a senior lecturer in land management at the SD Dombo University of Business and Integrated Development Studies (UBIDS), Ghana. He has built competencies around land tenure and urban planning research. He is a professional member of the Ghana Institution of Surveyors as Valuation and Estate Surveyor.

Walter Timo de Vries

Walter Timo de Vries (Prof. dr. ir) is Chair of Land Management and Study Dean of Geodesy and Geoinformation in the Department of Aerospace and Geodesy at the Technical University Munich. His research interests include smart and responsible land management, public-sector cooperation with geoICT, and capacity development for land policy.

Emmanuel Kofi Gavu

Emmanuel Kofi Gavu (PhD) is a lecturer in the Department of Land Economy, KNUST Kumasi, Ghana. His main fields of research and professional interests are application of GIS in urban management, and real estate and housing market analysis. He presents his research at major real estate conferences and seminars around the world.