According to a recent study Kigali City alone needs 310,000 new housing units by 2032 or around 20,700 units every year. However, less than 1,000 housing units are supplied every year. For affordable housing, which is estimated at a cost of about Rwf 35 million, the number of available properties is much fewer. A couple of challenges have been cited as the cause of the shortage of affordable properties in the local market. Among the setbacks is the cost of credit for developers with sector players calling for at least 8 per cent interest rate. While house buyers can get a loan at 11 per cent, developers get loans at 18 per cent in commercial banks. The elusiveness of affordable housing projects was also blamed on building materials and shipping prices which have gone up due to Covid-19 pandemic, with players calling for tax incentives. Rwanda Housing Authority (RHA) has also admitted that the real estate developers, on several occasions, have underlined that construction projects of affordable homes are not profitable. Further, on the demand side, potential buyers cite that their incomes are very low relative to affordable houses on the market. The above mentioned challenges are few of many which if not addressed early enough could make home ownership an elusive goal for the middle class. Among ways that Kigali city authorities and the Government can address this is by introducing sector tailored incentives that will see investors who would have otherwise set up high end housing projects consider affordable housing set ups. A good starting point is tax incentives for developers of affordable housing projects. If developers of affordable housing incur as much taxes and costs as high end properties, there will be little motivation to consider the investment. The local market also ought to be more accepting of innovation and creativity by developers which can serve to reduce the end cost of the property. This includes being more accepting of apartments, interior finishing using Made in Rwanda products among others.
