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Controlling Speculative Land Price Inflation in Ghana

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Controlling Speculative Land Price Inflation in Ghana CONTROLLING THE SPECULATIVE LAND PRICE INFLATION IN GHANA: A PREREQUISITE TO A SUSTAINED HOUSING AND INFRASTRUCTURE PRICE STABILITY Having worked as a built environment and real estate professional gathering data and attending industry conferences, summits, workshops et cetera, I have had access to several platforms where issues that bother on the built environment were discussed, key among which were the housing and infrastructure crises we face as a country. Quite interesting however, the recommendations many stakeholders gave as proposed solutions to the housing and infrastructure crises were always same and predictable. It has always been about the need for government to give tax incentives to importers of building materials so that prices could drop to ease the cost of housing and infrastructure development whilst others proposed the use of local building materials etc. But it does appear that, no one is interested in discussing the land price bubble, a significant variable in the equation that we all watched unconcerned over the years to deteriorated from bad to worst and from worst to desperate, almost becoming an issue of national security threat in recent times. Having thought through the gravity of the disruption this may cause, I decided to put the subject up for discussion in October, 2024 on one of the industry platforms. The concern was the arbitrary and uncontrollable land price hikes occasioned by speculative perceptions at the expense of substance pushing the prices of land, housing and general infrastructure out of reach of the masses particularly, the ordinary Ghanaian citizen. Several arguments came up but in the end, the inferences that one could draw from a summary of the whole debate points to one conclusion that, there was nothing the government or anyone could do about it and that the situation will persist and may continue ad infinitum. But some of us have always thought differently, contrary to the popular opinion that this market failure cannot be corrected. But before we go into the substance of this subject today, it is important for me to let you appreciate the gravity of this problem at hand using Tema Community 25 enclave as a practical case study. In 2019, the price of a titled land 70ftx100ft sells at an average price of Ghs 10,000. Fast forward in 2020, it sold at an average price of Ghs 22,000. In 2021, same piece of land sold at an average price of Ghs 50,000 and in 2022, it went up to an average price of Ghs 110,000, and reaching unprecedented levels of Ghs 230,000 in 2023 and in 2024 same sold at an average price of Ghs 470,000 or more. Estimating the monetary and percentage change in prices between the year 2019 and 2024, you will realized that the change in price between 2019 and 2020 is Ghs 12,000 representing a 120% increase in price. Then, that between 2021 and 2022 was Ghs 70,000 representing an increase in price of about 140%, whilst 2023 and 2024 recorded a change in price of Ghs 120,000 representing a 105% rise in price. As it is clearly seen in the above analogy, there is a consistent over 100 percentage increase in the year-on-year prices from 2019 to 2024, meanwhile, one cannot really point to any significant change in any variable accounting for these skyrocketing prices, inner road networks still remains deplorable, high dust intensity around the enclave, both public and private amenities still the same, the old age heavy traffic situation on the stretch still remains unprecedentedly high etc. Isn’t this weird and interesting, anyway the future will depend on us, whether we take action now or ignore, the consequences, good or bad will live with us. Now, having identified and defined the problem let me bring you back to the average income statistics of the Ghanaian. According to salaries Ghana (2024) and Worldometer (2024), the lowest Ghanaian average take home income per month is Ghs 1,280; the average median take home income is Ghs 4,340 per month whilst the highest average take home income is Ghs 22,600 per month. Using the highest income earners as a case study even though the lowest and median income earners form the largest part of the Ghanaian population, let me predicate the analysis on the assumption that, the average highest income earner does not have any other source of income saves his job and is able to save 50% of this income (though not practical), with the intention to acquire a piece of land 70ftx100ft in Tema Community 25. By inferential analysis, it will take this person in question approximately 42years from 2025 to be able to raise Ghs 470,000 which is the current average land price in 2025. What this means is that, the 42nd year from now would be 2067at which time the land price would have increased approximately 100% by forty-two (42) times, holding other variables constant, far out of reach of the average Ghanaian, taking reference from the land price incremental analysis in paragraph 4 of this article. With this analysis, it is obvious that, the lowest and median income earners do not even come into the picture. Taking inspiration from the above, we also decided to do a cost build-up in last quarter of 2024 out of curiosity to compare the cost of building a simple 2bedroom house to the price of a raw land in same Tema Community 25 using some selected local building materials. The cost comparative analysis was based on the assumption that one is able to build this 2bedroom house in a space of 90days. The 90days assumption was to mitigate the possibility of general price rise of building materials that may be significant enough to blow the estimate out of proportion. But to our surprise, we realised that the Ghs 470,000 could build a 2bedroom house with a little balance to take home. Today, we have reached a point where the prices of raw land even in developing areas within the