Analysis Of The Factors That Influence Housing Affordability In Kigali City

Abstract

Rwanda is one of developing countries facing the challenges associated with housing. Those challenges include among others, inadequate provision of housing especially for low income earners, infrastructure development, scarcity of land loans and mortgage availability. The main objective of this research project was to analyze factors that influence housing affordability in Kigali City while specific objectives were to determine the level of housing supply and demand in Kigali City, to identify significant factors that influence housing affordability in Kigali City and to determine the contribution of each factor to housing affordability in Kigali City. The methodology was based on a questionnaire survey distributed to households to collect primary data. A sample size of 93 households within the 3 Districts of Kigali City was targeted. A semistructured questionnaire was administered to selected respondents of 93 heads of households. Household survey, field observation, key informant interviews and focus group discussions were used to complement questionnaire data. A desk-review was used to review documents at both global and country levels related to housing affordability for secondary data. The analyses were done using qualitative and quantitative approaches with the aid of the (SPSS) Statistical Package for Social Sciences software. The study results revealed that the level of housing supply in Kigali City is low while the level of housing demand in Kigali City is high. Fifteen significant factors that influence housing affordability in Kigali City were identified and those are institutional structure affecting housing finance, cost and availability of finance for housing, income, household growth, interest rates and mortgage availability, property related taxes, child care, wealth, employment, infrastructure costs, costs and availability of land, cost of professional services and house price and rental costs, shopping facilities and finally tax concessions for both owner-occupied and rental housing. The contribution of each factor to housing affordability in Kigali City was analyzed by a correlation analysis that indicated that there are 11 factors which contribute to housing affordability in Kigali City with respect to their relationship between those factors and housing affordability and those are wealth, household growth, cost of interest rates and mortgage availability, employment, infrastructure costs, property related taxes, income, cost and availability v According to the research findings, recommendations for policy makers were drawn whereby policy makers should promote the use of modern methods and construction materials which will contribute to providing high quality housing in a short time and for Kigali City managers, they should contribute in providing housing cooperatives to increase availability of finance for housing for low income earners. For further research, it would be necessary to do studies on whether homeowners and renters perceive their housing costs as affordable or unaffordable. This could be compared to quantitative data on housing cost and income to provide further insight in to the various housing affordability measures.