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

Abstract

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.