Lately I’ve been hearing prospective buyers voice the same question: is now the right time to buy an apartment in Accra? While certain questions are universally applicable – how prime is the location, how good is the build quality – there are other questions that are more relevant in some markets than others. Timing happens to be one of those and let me explain why. (For more on investing, see: Investing in real estate in Accra today: is there cause for optimism?)

The Accra property market is almost entirely debt free. Out of the one hundred and twenty apartments that we at Denya Developers have built and sold in Accra, only five were via a mortgage. Whereas in the U.S., for comparison sake, 60% of all homes have a mortgage. With the value of all US real estate estimated by Zillow to be $33 Trillion and a total mortgage market of $10 Trillion, almost one third of all US home value is supported by bank financing.

This is important to recognize because when recessions hit (as they tend to at roughly seven-year intervals), those people who have home mortgages are more at risk of having to sell. If they’ve lost their job, if the equity in their house has been wiped out and they come under pressure, there will be an increased supply of real estate at the very time when most people are hunkering down and trying to limit their spend.

This is why in the U.S. during the banking crisis in 2008 prices cratered, even 50% down in some neighborhoods. Not only were buyers not buying, even if a buyer wanted to buy, banks were not lending. Once a bottom was found and banks got back on stable footing, the loans started flowing again and buyers ran back into the market snapping up houses for less than even the cost of construction.

What enabled that incredible buying opportunity in 2009 and 2010 was debt (it had forced sellers to sell and caused prices to fall) and what led to values shooting back up was also debt (buyers without the full cash could buy). And so we get a volatile market, prone to booms and busts, and the question on buyers’ minds: am I getting the timing right?

Turning back to Accra, without debt, when a downturn hits, there is no painful and significant drop in prices. Instead, it feels more like a lull in activity. Everyone and everything just stands still. So what does that do to a real estate purchase? Not that much. If you’ve decorated your apartment nicely with good furniture and you’ve bought into a building with active management, then you’re going to be able to attract a tenant and ride out the low period. Why sell if you don’t have to?

Meanwhile, developers (who if they’re like us also avoid debt like the plague!) won’t sell below construction cost. It negates the entire purpose of running a business. We just wait, delay the launch of a new development, and then rent out any unsold stock. There isn’t that volatile swing down that just screams for people to buy, and there isn’t that spike up when prices seem to make no sense.

The key to buying in Accra is getting the location right, (see Location, location, location) making sure that you’re going to get a high-quality, smartly-designed build (which is no easy feat!), and then striking the right deal. Getting the timing wrong and losing a bunch of money can very much happen in debt-filled markets, but when you take debt out of the equation, like in Accra, it makes for stable asset prices without the stress of downturns or guesses on timing.

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