The Rent vs. Own Dilemma in Ghana: A Real Estate Reality Check
Owning property in Ghana is often seen not just as a financial decision, but a cultural expectation. But is it always the smartest thing to do?
One of the few decisions that is emotionally and financially loaded is the choice between owning and renting a home. For many years, owning a home has been a symbol of achievement and a mark of stability. It is seen as a milestone that marks not just progress, but status, legacy, and peace of mind.
Walk into any Ghanaian household and you are likely to hear a familiar phrase: “Don’t waste your money on rent — build your own.” In many families, the idea of paying rent well into adulthood is viewed almost with suspicion, or at the very least, regret. Property ownership is woven into our cultural fabric. It represents permanence, control, and, above all, security.
But is it always that simple?
How true is this belief in today’s economic reality? Ghana’s urban centers are becoming more expensive, construction costs are rising, and formal financing through mortgages is still largely inaccessible to the average person. According to the Africa Housing Finance Yearbook, total mortgage debt as of July 2024 was GHS 8.6 billion ($566 million), a mortgage debt-to-GDP ratio of 0.78%. This metric is 1.86% in Kenya and 25.7% in South Africa. Ghana’s housing market is primarily cash-based. And that changes the equation entirely from what pertains in the Western countries, where debt financing is the norm for home ownership.
So, the question remains: Is owning a home really better than renting, especially when debt is involved? Or is it time we rethink the assumption that ownership is always superior?
The Case for Renting — Freedom or a Financial Leak?
Renting in Ghana often gets a bad rap. It is seen as a temporary phase – something you do when you are young, just starting out, or have not yet “gotten serious.” And yet, for many Ghanaians, renting is not just a stepping stone; it is the most practical, and at times, the only viable option.
One of the key benefits of renting is flexibility. For professionals who move between regions, or young families still finding their footing, renting allows mobility. There is no long-term commitment, and you aren’t tied down to a single location. This is particularly important in urban areas like Accra and Kumasi, where career opportunities or family circumstances can shift quickly.
Renting also comes with a lighter financial load upfront. While landlords typically require one- or two-years’ rent in advance, it is still considerably lower than the amount required to purchase a property outright. There’s also freedom from responsibility; when the roof leaks or the plumbing fails, it’s likely not your financial burden.
However, renting comes with its own set of headaches. Inflation in urban housing markets has moved rents steadily upward, leaving many tenants struggling to keep up. Leases may be unstable, landlords uncooperative, and after all the payments, you end up with no equity in the property— no tangible asset to show for years of living in a property.
Yet, it is important to recognize that renting is not inherently a waste of money. For many, it allows room to save, invest in a business or their own property, or simply live within one’s means, especially in a market where property ownership requires significant capital.
Owning a Home — The Dream, the Debt, and the Dilemma
Owning a home comes with undeniable advantages. It offers stability. It protects you from rising rents and difficult landlords. It provides a sense of accomplishment and pride. Most importantly, it builds equity over time, especially if property values in your location appreciate.
In Ghana, however, owning usually means either building over time or buying outright in cash. That is no small feat. The cost of land, materials, labor, and statutory fees add up quickly. For many, it can take a decade or more to complete a home, during which time they continue to rent or live in incomplete structures.
And then there is the question of using debt to buy.
Unlike countries with mature mortgage markets, Ghana’s lending environment makes mortgages a difficult choice. Mortgage financing is relatively small but growing. Interest rates remain high, mostly within the range of 25-35%. For someone taking a GHS 500,000 mortgage (~ $48,000), the total repayment over 15–20 years can skyrocket. What starts as a step toward ownership can quickly become a financial trap.
Even philosophically, the idea of “owning” with a mortgage deserves scrutiny. Until that last payment is made, the house is not truly yours, it is for the bank. If circumstances change — a job loss, medical emergency, or failed business, the property could be repossessed, wiping away years of effort.
This is why many financially savvy Ghanaians prefer to build incrementally, paying cash as they go. It is slower, but it provides peace of mind and true ownership, free of debt.
Still, we must also consider another angle: what if the home is not just for living in?
Is Your Home an Investment or a Liability?
Many believe buying a house is the best investment one can make. It is partly true. Real estate, in general, does appreciate in value. But it depends on what kind of house, and how it is being used.
Your primary residence, the house you live in, does not generate income. It costs you money every month. You pay utilities, maintain the structure, and if you have a mortgage, you service the debt for years. Financially, this is more of a lifestyle asset than an investment. The return only comes if and when the property is sold. And even then, it depends on market timing and location.
On the other hand, buying property to generate income, through rent, changes the dynamics entirely. If structured well, tenants help pay down your mortgage, while you gain from property appreciation. In that sense, using debt to acquire an income-generating asset can be a smart financial move, more so than taking a mortgage for a home you live in yourself.
Then comes another crucial question: What if Ghana had more accessible, affordable mortgage options?
In a country where most people still pay in cash or build slowly, the availability of low-interest, long-term mortgage products could shift the housing market dramatically. Young professionals could buy earlier. Home ownership would become viable across income levels – formal and informal workers. And if monthly mortgage payments are comparable to current rents, it could make financial sense to buy instead of rent, even with debt. Property demand will increase driving economic growth.
But for that to work, Ghana’s financial system would need to evolve. Mortgages must be prioritized by regulation, interest rates controlled, and borrowers protected from predatory lending. Without this foundation, easy access to credit could inflate housing prices and lead to instability as seen elsewhere in the world.
In Summary: No One Correct Answer
So, should you rent or own? It depends.
If you have stable income and can afford to own without stretching your finances thin, go for it. If you are still figuring out your future, building a business, or value flexibility, renting might be the smarter choice.
If you are considering debt, be strategic. Using a loan to acquire property that generates income makes far more financial sense than taking on debt for a house that only serves your lifestyle.
In Ghana, where cash is king and credit is costly, ownership should never be pursued just for prestige. The smart path is the one that aligns with your goals, your resources, and your risk tolerance. Not one dictated by societal expectations.
Owning is not always better. Renting is not always a waste. The best decision is the one you can live with. And afford…in the long run.
