Abstract
Housing is a challenging issue in Ghana, due to the rising demand and sluggish supply which has led to a deficit of more than two million housing units. This study aimed to estimate and analyse the determinants of the demand for housing in Ghana. The estimated elasticities show that owner and rental demand for housing is price and income inelastic. Permanent income elasticities were greater in each case than current income elasticity. The quantile regression showed that permanent income, current income and price were significant for all quantiles of housing units consumed. It is recommended that all these factors be taken into account when addressing the housing supply challenges facing Ghana to help clear the existing deficit and to provide for the anticipated increase in demand due to increasing income, since demand for housing in the country is income inelastic.
Highlights
Demand for housing1 in Ghana is increasing progressively as a result of demographic, economic and social factors
This study aimed at filling a gap in the literature in relation to the housing situation in Ghana, providing both the mean and quantile housing demand estimates for the country
It was undertaken because the housing market in Ghana, like most African countries, is practically different from that of the developed and other emerging economies
Summary
Demand for housing in Ghana is increasing progressively as a result of demographic, economic and social factors. Malpezzi and Mayo (1987) and Asiedu and Kagaya (1991) conducted empirical studies on demand for housing in Ghana, but each focused on a single city, so their findings cannot be generalised to the whole country. This study provides the income and price elasticity of the various quantiles of housing consumption to aid effective housing demand policy and planning in Ghana. The social relations of housing have dwindled in the bigger cities (UN Habitat, 2011), households in the majority of towns and villages still cling to this belief This clearly illustrates that in developing and some emerging economies the functioning of the housing market is not the same as in developed countries. The rest of the paper is organised as follows: Section Two outlines the theoretical and empirical framework; Section Three presents the owner demand estimates; Section Four presents a discussion for renter demand estimates; Section Five comprises a comparative analysis of elasticities; while Section Six concludes the study
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