Residential property finance in Ghana has followed a conventional pattern in terms of the continuing preponderance of the informal sector and the intervention of government to attempt to build formal mortgage markets.

What is perhaps special is that the government of Ghana attempted the development of a secondary market in mortgage lending without a strong primary market on which to build.

However in doing so they did not address many of the fundamentals on which any type of mortgage market must be based - those of secure and transparent title and a clearly defined regulatory system; a reasonably responsive supply of formal housing; and the development of mortgage instruments which address the issues of affordability.

The macro-economic circumstances - notably the very high rate of inflation - thus made it impossible to build a market without special instruments to address the front loading problems associated with high first year payments.

This paper assesses the reasons why the government's secondary market initiative failed and the way that the formal primary mortgage market has developed in the face of this failure.  In particular it examines the segmentation of the market into cedi and dollar denominated instruments and the implications of these developments for the future expansion of the formal housing finance market.