Real estate developers in Ghana have attributed the rising cost of building materials to the depreciation of the cedi against the dollar, inflation, and the economic crisis in the country.
In an interview, the Executive Director of the Ghana Real Estate Developers Association (GREDA), Mr. Samuel Amegayibo told The High Street Journal (THSJ) that the increasing cost of construction is beyond the sector’s control, as key building materials such as cement, iron rods, tiles, and roofing sheets are either imported or rely on foreign inputs, making them vulnerable to exchange rate fluctuations.
He said Ghana’s construction industry is heavily dependent on imported materials, hence, with the cedi struggling against the dollar, the cost of importing building materials has forced businesses to increase prices.
Mr. Yaw Annor, a builder and martial shop owner in Accra, told THSJ that “most of the materials we sell are fully imported, so when the dollar rate goes up, suppliers adjust their prices, and we have no choice but to pass the cost onto buyers.”
He added that some suppliers now prefer dollar payments, making it even more difficult for individuals who want to build their own personal homes.
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However, Mr Amegayibo also cited high interest rates and limited access to credit as major factors increasing the cost of construction. “Many rely on bank loans to finance projects, but high lending rates have hindered many from acquiring homes.”
He said even locally produced building materials such as sand and blocks have seen price increases, further worsening the situation. Inflation has also led to increased costs of fuel, transportation, and labor, all of which affect construction expenses.
“The cost of building a house today is almost double what it was three years ago. If these economic challenges continue, many Ghanaians will not be able to afford homes,” said Mr. Ebenezer Ofori, a masonry engineer.
Nonetheless, these situations have led to a slowdown in construction projects, with some developers halting new developments until economic conditions are improved.
Meanwhile, recent data from the Ghana Statistical Service (GSS) underscores the significant rise in building and construction costs. According to the GSS, the Prime Building Cost Index (PBCI) for April 2024 indicated a 19% increase in overall building costs compared to April 2023.
Further, in March 2024, the Construction Producer Price Index (C-PPI) recorded an annual inflation rate of 56.5%, highlighting substantial cost increases faced by construction producers.
Mr Amegayibor called on government to incentivize local manufacturing by investing in steel and cement plants, lowering interest rates for construction projects, and reducing taxes to ease the process for individuals who prefer to build their own homes.
