Rising cost of building materials will exacerbate housing deficit
Decent housing or accommodation is a basic necessity in life. It constitutes important human rights, but this basic necessity is not common to many of the citizens.
A decent abode for people to lay their heads after a hard day’s work is a mountain of challenge to many of the citizens, especially migrants to the cities, the poor working class whose take home salary cannot take home at the end of the month, and the poor and vulnerable in society.
Thus, it is not surprising that the cities and big towns across the country are growing slums with people erecting illegal ramshackle structures along drains and gutters and any available space with its attendant challenges.
This is because the average Ghanaian cannot afford to purchase, for example, the government affordable houses.
It is a common sight in most of the cities in the country to find people sleeping on the streets, pavements, market places, frontage of stores and buildings, and in kiosks because they do not have money to rent a room.
Slum dwellers lack access to sanitation services and social amenities such as toilets, bath rooms, drains.
Conservative estimates by the Ministry of Works and Housing have it that the country’s housing deficit stands at more than two million houses.
This stark revelation means that the country has to construct about 200,000 housing units every year in the next 10 decades to be able to address the housing deficit.
And if nothing is done about the problem, the figure is likely to double in the next decade, considering the increasing population figures, rural urban migration and influx of foreigners into the country.
With the huge housing deficit and high cost of accommodation, it appears a lot of people, especially those in the cities, are not able to rent thus various cities in the country are growing and sprawling slums in most part of the cities.
Housing, as indicated earlier, is an important human necessity and a right as enshrined in most international treaties.
Indeed, shelter forms part of the core human need, after food, water and air. But this basic human necessity is not common to many of the citizens.
In view of the importance of shelter even birds create nests to protect themselves from the vagaries of the weather. Though birds do not require money to create their nests, it takes their strength, time and effort to create their nests.
In the face of the growing housing deficit, is the skyrocketing of building materials such as cement and iron rods, which are some of the important items to construct a building.
For example, a tonne of 12-millimetre iron rods which stood around GHc3, 700 is currently sold at more than GHc5, 500. Similarly, the price of cement is currently sold around GHc50, which was GHc37.00 eight months earlier.
Worried about the situation, Parliament recently set up a Committee to look into the matter, but as of now nothing has been heard from the work of the Committee.
The government had explained that it had not increased taxes on building materials to warrant the hikes in prices we are currently experiencing.
In view of the increases in prices of cement and iron rods, for instance, masons have also increased their rates, putting financial strain to players on the housing industry.
For example, Masons are currently charging GHc100.00 for a day’s work from the previous GHc80.00 they were charging.
Also, landlords have also increased their rents to be able to cope with the rising cost of building materials.
The rising cost in the prices of building materials would have serious financial consequences on players in the real estate and housing companies, since they would need more financial resources to run their business.
In addition, the menace would compound the existing growing housing deficit, throwing more people on the street and living in slums due to their financial inability to rent a house.
Furthermore, the rising cost of building materials may affect the output of the players in the real estate and housing business. This may lead to job cuts and layoffs as the out of the industry falls.
Mr. Simon Mensah, a mason in an interview said it was not his wish to increase his daily work rate to GHc100.00, but had to do so to make ends meet.
“We travel to far places to work and due to increase in the price of transport fares, if we don’t charge GHc100.00 by day, you will come home with nothing,” he said.
He said some clients they were working for had suspended their projects due to the high cost of building materials.
In an interview with the Executive Secretary of Ghana Real Estate Developers Association (GREDA), Mr Samuel Amegayibor, he said the rising cost of building materials was serious concern to players in housing and building or construction.
“In January, 2021, the price of iron rod was increased by 40 per cent and recently also hiked by 10 per cent,” he said.
“From January to date, there have almost 50 per cent increase in the price of building materials such as iron rods and this is a big blow to players in the housing construction industry,” he said.
Asked what could be the reasons for the rising cost of building materials, Mr Amegayibor said due to COVID-19, “sources of production of the building materials are not able to produce.”
According to him, the bulk of building materials was imported because local production could not meet the demand of the market.
He said because of the high demand, producers of building materials abroad, had taken advantage of the situation to increase their prices.
Mr Amegayibor said the high cost of freight charged by shipping lines was also contributing to the high cost of building materials.
“The currency volatility, though not a major factor, is also influencing the prices of building materials since majority of building materials are imported,” he said.
Outlining the effect of the rising cost of building materials on the housing and construction industries, the Executive Secretary of GREDA, said the practice would “push the prices of houses to go up and affect the output of the players in the housing industry.”
“The rising cost of building materials will push housing production to come down,” he said, adding that “If I were producing 10 houses before COVID-19, now I have to reduce by two to be able to complete the remaining of the structures.”
Mr Amegayibor entreated the government to waive the taxes on building materials to help reduce their prices.
In addition, he said, strategies must be put in place to produce building materials locally.
“The IDIF initiative provides a fine opportunity for the country to start the process of manufacturing building materials locally to reduce importation,” Mr Amegayibor, said.
With the effects of the COVID-19 on the economy, businesses and individuals, still lingering on, the growing increase in the prices of building materials would be the last straw that broke the camel’s back.
Market forces are driven by profit and as a result will push all their cost on consumers.
Thus, it will be appropriate for the government to quickly intervene and put strategies in place to halt the rising prices of building materials to address the growing housing deficit.
The government alone cannot address the housing deficit and the private sector must be incentivised to help address the housing shortfall.
Writer’s email: email@example.com
By Kingsley Asare