Today, I revisited the question of house rents. How much do households pay as rents in Accra? Maybe like many people renting in Accra, I am feeling the heat of paying rents in advance of two years.
But more importantly, I have been digging for data on the average rents’ people pay in Accra for a project on Ghana’s rental housing market. This blog post summarises some ofmy findings. I present and compare rental data from multiple sources. You can see them as general statistics of the rental housing market in the Greater Accra Region.
The Ghana Statistical Service (2019) reported that the average annual cash expenditure on housing, water, electricity and gas was 1,643 Ghana Cedis. In urban areas, to be specific, the mean cash expenditure on housing, electricity, water and gas was 2,163 Ghana Cedis per year. Cash expenditure of actual rentals for housing was 854 Ghana Cedis on average per year.
The average gross annual household income according to the same report was 33,937 Ghana Cedis.
Left on these averages, rents in Ghana can be said to be cheap. The average rent to income ratio will be 4.8%. Anything less than 30% is often considered affordable. To be fair, we need medians for these computations.
That notwithstanding, these figures conceal the real affordability challenges Ghanaians face.
The Ghana Living Standards Survey Seventh Round (GLSS 7) report did not provide average or median rents for administrative regions. A situation that elevates the diffulty in assessing Ghana’s rental housing market performance.
The data collection for the report took place from 22nd October 2016 to 17th October 2017. So, the data is old: four years old. From government sources, this is the latest report covering the entire country or even a region.
Brokers report on properties they manage, providing a narrow view of the market.
How difficult is it to obtain real estate data?
The JLL ranked Ghana’s real estate market as having low transparency in 2020 (with a score of 4.15 out of 5 of which 1 is the highest possible score i.e. the smaller the score the more transparent a market it). In comparison, Mauritius scored 3.33.
Notably, these figures conceal several dynamics in the residential rental property market. To be honest, the actual cash amounts households pay depending on which market segment one looks at can either be crazy expensive or cheap.
When I relocated to Accra in 2016, my annual rent was 3,600 Ghana Cedis for a one-bedroom. My current yearly rent for a two-bedroom apartment is over 9,000 Ghana Cedis. Yea, I still rent in Accra.
Housing tenure types in Accra
Most households in Accra and Greater Accra are tenants. About 49% and 41% of households are renters in Accra and Greater Accra Region, respectively. A significant share of households, while being renters, do not pay rents. These are known as rent-free. About 32.4% of families in Accra and 30.2% in the entire region live under this tenurial arrangement. These are households sharing housing with friends, relatives, among others.
Arguably, these households would have rented their residences if they could afford them. Other conventional tenures such as squatting appear an Accra phenomenon because of the unaffordability of standard rental housing.
Others may also pay the rent on behalf of other households. In Accra, for instance, 8.7% of households have their rents paid for by the government, private individuals (13.4%), private employers (10.3%).
Household occupancy status (%) of the dwelling unit by locality and region
| Owning | Renting | Rent-free | Perching | Squatting | Total |
Ghana |
42.1 |
27.6 |
29.7 |
0.3 |
0.2 |
100.0 |
Accra | 18.3 | 48.6 | 32.4 | 0.1 | 0.6 | 100.0 |
Urban | 31.4 | 37.2 | 30.6 | 0.5 | 0.3 | 100.0 |
Rural | 57.9 | 13.6 | 28.2 | 0.2 | 0.1 | 100.0 |
Greater Accra | 27.8 | 40.9 | 30.2 | 0.3 | 0.8 | 100.0 |
Average cash expenditure by households on rents in the Greater Accra Region
GLSS 7 survey asked a specific question on the cash amounts households paid as rents
- How much does the household pay in cash towards the rent?
(IF FREE, PUT ZERO FOR AMOUNT AND THE TIME UNIT)
AMOUNT….
Time Unit: Daily…………….1
Weekly…………2
Monthly………..3
Quarterly……….4
Half Yearly……5
Yearly…………..6
N/A………………0
By analysing the responses to this question, we can tell the amount households paid as rents in the Greater Accra Region. First, all durations of rent payments were annualized. That is, daily rents were multiplied by 365, weekly rents by 52 and so on. It should be noted that some households reportedly made non-cash payments. These were not included in this computation.
Source: Author (2021) based on GLSS7 data
The annual median and average rents households paid in the Greater Accra Region as of 2017 were 840 Ghana Cedis and 2,072 Ghana Cedis, respectively.
The interesting thing from the data is that 95% of all rents were 5,200 Cedis or less per year. The remaining 5% paid substantially higher rents. From the 95th to the 99th percentile rents paid leaped from 5,200 to 20,400 Ghana Cedis. This finding suggest that the rent market is highly skewed.
The highest annual rents computed from the dataset was 100,320 Ghana Cedis.
House rents in Accra, according to 3 Brokers
- Broll Ghana
The rents for a fully furnished 2-bedroom apartment for 2021 ranged between US$2,700/month to US$3,000/month.
A low of US$2,200/month was also observed.
For fully furnished apartments in Airport Residential Area, Cantonments, Dzorwulu, Labone, Ridge and Osu, monthly rents were around US$1,751 for a 75 sq. meter apartment and US$2,291 for 175 sq. metre apartment in 2020.
3. North Court
Prime rents for a furnished 2-bed apartment averaged US$2,400 monthly in 2020
From these brokers, if we assume an average monthly rent of US$2,000 per month in Accra, renters of these apartments belong to the top 1-2% of the rental market.
This segment constitutes a micro-segment of Accra’s residential market, which is already experiencing an oversupply of properties. Most households do not belong to this market segment.
Notably, for the prime residential areas of Accra, vacancy rates are the highest. In Airport Residential Area and Cantoments, vacancy rates were 37% and 30%, respectively.
Source: North Court (2021)
The Greater Accra Region has distinct residential submarkets. These segments could be broadly classified as formal and informal; the formal being properties built by developers. Each of these market segments has several sub-markets. Even in the informal market, there is a prime residential submarket. On the low-end are households in overcrowded and rent-free housing. Included in this segment are squatters, perchers and the homeless. The stark differences in submarkets in the same city don’t make sense. Indeed, real estate activites concentrate on the top 1%-5% of the market.
In Accra, only 5% of households live in flats/apartments. For the rest of the region, this is 5.5%. In comparison, 73.9% of households in Accra occupy rooms in compound houses.
An essential question we must ask is: who will private developers build for lobbying for government support? Those who need affordable housing are not those served by developers. Indeed, it is highly impractical for a developer to deliver dwelling units with recoverable annual rents of 2,072 Ghana Cedis or less.
Unless otherwise specified, all data was sourced from the GLSS7 report and datasets
