Reliably estimating the cost building a house in Ghana and other African countries is quite tricky. Even for a simple roofing of a 1-bedroom house, before you realise, you’re spending way more than you budgeted. In Accra, the cost variations in building can be crazy. In some communities, you pay bush allowance before you can move to site to start excavations—otherwise you’ll be harassed by charlatans and community vigilante groups. Crazy and unexpected! Hopefully, this post will help answer most of your questions about the cost of building a house in Ghana.
For a 3-bedroom house, it could cost you about 300,000 Ghana Cedis, but it could be lower or higher depending on your material choices, whether you’re self-building or using a contractor/developer, location of construction among other factors. Many people tend to build incrementally (sometimes over 10 years) and may inhabit the house before it is fully completed. Some people never finish building the house because of the cost.
In the rest of this post, I will explain more on the cost of building a 1-bedroom house (popularly referred to as chamber and hall with kitchen), 2-Bedroom house, 3-bedroom single storey. And the various factors that affect project costs, and the hidden costs to watch out for.
The Cost of Building a House in Ghana
To guide our discussion, Buitelaar (2004) distinction of the main cost components of building as transaction and production costs is very useful and will be used here.
1. Transaction costs
Technically, transaction costs are the cost of a transaction and using institutions. They refer to “all costs other than the costs of physical production” (Lai, 1994, p. 84). They include cost of searching for information, bargaining and negotiations, monitoring of contracts, dispute resolutions etc. To give an example, say you wanted to pay your carpenter using mobile money. Aside from having to commute to the vendor and back, you must also pay charges to transfer the money. The time, transport cost and mandatory vendor charges constitute your transaction costs. Many people do not include such fees in the costing of the building project.
Why must you consider transaction costs in planning your house project?
The simple answer is; they are hidden, tough to estimate and easily result in project cost overruns. Did I tell you that bags of cement might go missing on your site? In Accra, you may encounter all kinds of digging fees you didn’t plan for. There are many people whose sandcrete blocks, roofing sheets, cement, paint were stolen at night. It’s not a joke!
In one of my interviews earlier this year with the CEO of Paraku Estate, one of the prominent developers in Accra, he didn’t mince words about how theft affects project cost.
Godwin, you will be surprised to know that some workers steal even nails and put it in their hair when leaving the project site. That may not seem much, but if you have 4 or more staff doing that over a few weeks. . .it accumulates.
In other incidents, he said, the tipper drivers may load the sand or stones in a way as if the dumb box is full, but it’s not. They only heaped the sand in the middle. So, for each trip, you get less than the expected volume of sand—but more trips for the driver and his team. You end up needing more trips than was initially estimated. All these affect the accuracy your cost estimates.
Stealing is a common problem, but also is dishonesty. Your workers may even say they’re onsite when they’re not, and you pay them unknowingly. I been a victim and paid for unfinished works in the past. Don’t be deceived that the foreman is your relative, there can be surprises. Unless you’re physically on-site monitoring each step of the way, your budget will be depleted, but your housing project hasn’t gone far.
Finding a skilled artisan for your project can be a headache of its own, paying for additional works because of poor workmanship is the second.
There are other transaction costs, especially if you’re building the house in Accra or any major Ghanaian city. These may include land litigations and dispute resolutions, digging fees, settling land guards, bush allowance, moving fees—there are all kinds of charlatanic fees/charges in the market. I first heard of bush allowances at a project site in Ashaiman, Accra. In case you’re wondering, it’s merely a group of community men who come to harass you for starting your project and demand you pay them. The frustrating thing about these charges is that when you pay to one group, another can emerge. They can vandalise your project if you decline to pay them. The police can help, but that comes with other extra costs.
Next time you see an expensively priced house in Accra, you might be shocked to know that the developer had to buy that land several times—paying multiple claimants. Some projects have even stalled because of some of these issues ligation problems.
The fact about transaction costs evidently is that they are hidden and inconsistent. For the same housing project, someone may build at a lower price if they avoid most of the transaction costs, others may not even complete the house because they spent so much in settling all kinds of charges and fees. So, they’re critical to the success of the house project. Some builders/contractors in any local area often know about most of these costs and how to deal with them. If you’re self-building getting in-depth local knowledge is crucial for the success of your project. In one instance, I suffered litigation and had to literally repay for plots although I already had my deed registered and all documentations. You can read the entire experience here
Official transaction costs in building a house
These costs also termed regulatory costs are easy to determine, and every quantity surveyor or builder can give you excellent judgement. They include the cost of obtaining the development permit, building permit, certificate of habitation/occupancy, land title/deed registration. Some developments require additional Fire Service and Environmental Protection Agency Certificates.
The cost of obtaining a building permit for example depends of fee fixing resolution of the district assembly and the estimated development cost of the house. For example, the cost of building permit at the La Dade-Kotopon Municipal Assembly as published in 2016 was 0.65% of cost of development plus a processing fee. Some districts charge flat rates, others offer express services at a slightly higher fee. See the requirements to apply for building and development permits from the Accra Metropolitan Assembly here.
The Building Regulations (LI 1630), 1996 allows you to commence development if, in 3 months, the Planning Authority fails to communicate the outcome of the application with the applicant.
Regulation 7;
(2) An applicant not informed of the grant or refusal of the application may after the expiry of the 3 months commence development on the basis that the application is acceptable to the District Planning Authority.
Nevertheless, it is not unusual for the building permit application to take several months, sometimes years which can affect project timelines. I interviewed Mr Samuel Ameyigabor, the Executive Secretary of Ghana Real Estate Developers Association (GREDA) earlier this year. He had just received the building permit for a project after one-year of application. His experience is not an isolated case, the frustrations of obtaining a building permit are widespread. With unduly prolonged application processing, one may end up paying “facilitation fees”. Some Planning Authorities are, however, more efficient than others.
You should always get the necessary permits for your house.
How loan interest rates affect the cost of your house project
If the project is financed partially or wholly with bank loans, the interest paid is part of the cost of your project. Cost of finance in Ghana is prohibitive. You’ll hardly get a loan with less than 20% interest per annum. See the other hidden cost you should know about in getting a loan. Savings and Loans Companies and Credit Unions tend to have a different way of computing their interest rates and may be stated in weeks or months, e.g. 3% per month—such rates commonly workout to 32-42% per annum. Speak to a finance expert before you sign the loan agreement.
2. Production/construction costs
This is the cost items you’ll typically get from the quantity surveyor/foreman/artisan. They refer to the actual prices of factors of production; land, labour and capital you procure to build the house. Cost may also include onsite infrastructure. Bear in mind that for all these cost items on paper, in reality, one will incur transaction costs as well. For example, wood may be priced at X amount per unit. You’ll need to shop around to find the best price and deal, you may say “thank yous”, pay loading and transportation costs.
The total construction costs of building a house vary depending on several factors; design type, space, materials, finishing, interior decoration, location of construction, inflation rate etc.
Within the Ghanaian housing literature, the reported cost build-up of a house varies, as you see in this figure. But obviously, more than 50% of the total cost of building a house in Ghana is materials and labour costs.
How much it cost to build a house (construction cost) in Accra?
| Chamber and Hall incl. Kitchen | 2-Bedroom |
Single Storey: 3 Bedroom
|
|
| Gross floor area | 36 | 126 | 138 |
| Foundation | 11,268.00 | 40,698.00 | 44,574.00 |
| Frame | 10,980.00 | 40,320.00 | 44,160.00 |
| Envelope | 20,268.00 | 55,962.00 | 73,590.00 |
| Services | 8,640.00 | 59,850.00 | 69,690.00 |
| Finishes | 14,580.00 | 69,930.00 | 82,800.00 |
| Total | 65,736.00 | 266,760.00 | 314,814.00 |
Estimates by Nana Yaw Osei-Owusu (MSc., MGHIS)
These estimated do not include; land cost, fence walling, landscaping, paving etc. For Kumasi and other regional capitals such as Tamale, Sekondi-Takoradi, the construction cost is about 8-10% less.
The cost of building a chamber and hall with Kitchen will cost about 65,000 cedis, a 2-Bedroom 267,00 Ghana Cedis and Single Storey: 3 Bedroom 315,000 Ghana Cedis. The estimates however make several assumptions and are only indicative.
For more detailed cost estimates, see Invest in Ghana.
In summary; how much does it cost to build a house in Ghana? The cost of a home, whether it is a chamber and hall, or 3-bedroom house, is the sum of the transaction and production costs. The more you can save, especially on the transaction costs, the cheaper the house can be built.
References
Buitelaar, E. (2004). A transaction-cost analysis of the land development process. Urban Studies, 41(13), 2539–2553. https://doi.org/10.1080/0042098042000294556
Centre for Affordable Housing Finance in Africa. (2017). Housing finance in Africa: 2017 yearbook. October, 1–214. https://housingfinanceafrica.org/app/uploads/CAHF_smallpdf.pdf?x77297
Chung, L. L. W. (1994). The Economics of Land-Use Zoning: A Literature Review and Analysis of the Work of Coase. The Town Planning Review, 65(1), 77–98. http://www.jstor.org/stable/40113262
Karley, N. K. (2008). Ghana Residental Property Delivery Constraints and Affordability Analysis. Housing Finance International, 22(4), 22.
UN-HABITAT. (2011). Ghana Housing profile. In UN-HABITAT.
Do you have experience with building in Ghana, comments, questions? Share them below.
Hello I’m from Houston Texas, I’d like to start my transition to Sunyani, Ghana I’d like more information buying land and build a home, and possibly getting a bank loan.
Very useful information. I got just at the right time. Thanks very much for sharing
You’re welcome, Charles. Glad that data was helpful
Great piece of information👍🏽, thanks for sharing. . Exactly as you put it.
Glad you found this post valuable.
Very helpful. We have just bought land in Mompang
Glad you found the article useful. And congratulations on your purchase
That was a useful information
I’m glad I could help
Thank you for the information. Please in what currency are the rates quoted – Ghana cedi or ? Other?
They are in Ghana Cedis
Great work. Exactly stat I needed
I’m glad that this post was useful to you.
this is good thanks
Nice to know Aaron, that this post was helpful.
wow, very insightful. Well researched. Great one
Thanks Monica, glad you found it insightful. The cost of housing in Ghana is a huge deterrent to homeowner. Knowing the cost implications prior to starting a housing project is a useful step.
Interesting and educative
Thanks Blaise