Who protects consumers from unfair housing prices?

As Rwanda’s urban centres continue to grow and attract real estate investment, concerns are mounting over soaring property prices and who, if anyone, is protecting buyers and renters from what many call unfair housing costs. In a market where informal brokerage, and profit-driven pricing dominate, many Rwandans find themselves priced out of decent housing. While the government promotes initiatives like the Rwanda Affordable Housing Scheme, the lack of pricing regulation in this free-market economy leaves room for imbalances, prompting questions about consumer protection in the sector. ALSO READ: Realtors urge gov’t action against fraud, unethical practices Many young professionals in Kigali are finding it increasingly difficult to stand on their own feet after graduation. Despite securing jobs, a significant portion of their income is swallowed by rent, leaving little room for savings or personal development. “As a fresh university graduate trying to start life, I expected some challenges but I didn’t think rent would take up almost all of my salary. By the time I pay off my rent, there’s barely anything left for savings or personal development,” says Cynthia Akaliza, a junior accountant in Kigali. The struggle to find alternative and affordable housing options for young people entering the job market like Akaliza is complicated by practices by landlords who hike rental prices each day. “Landlords often wake up and suddenly decide to raise rent without any notice, knowing someone else will take the house. And because we have nowhere else to go, we’re forced to accept it,” she says. Denis Mugabo, an entrepreneur based in Kigali, expresses similar concerns, saying the market has shifted, making even modest homes unaffordable for average families. “Three years ago, with Rwf100,000,000, one could easily purchase a spacious, well-priced home, and it felt like a fair deal for anyone looking to buy. However, when I recently inquired about a one-bedroom apartment, I was shocked to hear the owner quote Rwf 12,500,000. It makes you wonder how a family of six can possibly afford to live in Kigali with such rising costs.” ALSO READ: City dwellers warned of scams in property market Developers take Annet Mukayuhi, a proprietor of several real estate properties in Kanombe sector in the City of Kigali, attributes inflated housing prices to the fact that most people building homes in Rwanda are doing it on expensive mortgages. “The interest rates attached to mortgages and the cost of building materials increase almost every day, and that cost eventually falls on the final buyer. In the end, it’s the consumer who suffers the most,” she explains. “I can’t rent out my property and still be burdened by mortgage payments.” For developers like Mukayuhi, regardless of who determines the market fair value, their focus is on repaying the mortgage they acquired, ensuring quality service, and making a reasonable profit. “If the market doesn’t reflect those realities, it becomes unsustainable to keep providing quality housing,” she says. Professional realtors could play a crucial role in stabilising Kigali’s rising property prices by promoting transparency and guiding both buyers and sellers toward fair valuations, according to Pascal Ntaganda. A professional realtor with nearly a decade of experience maintains that the sector is currently plagued by a lack of professionalism and that realtors and buyers have limited market knowledge. “In Rwanda, most people just wake up and become realtors. They don’t necessarily understand what determines a fair property price. Factors like location, market demand, the quality of materials used, or the property’s rental potential, are key,” he explains. “While property owners often initiate the price, a knowledgeable and ethical realtor can influence it significantly. If a realtor is truly professional and understands the market, they can advise both the buyer and seller accordingly, to meet at a fair price,” he adds. Yet, he says, most buyers wake up and decide to go and look for a house all by themselves and just like that the seller will take advantage of them because they know so well that they don’t understand the market fully. ALSO READ: Top seven real estate projects in the pipeline in Rwanda Unfair practices Ntaganda raises a key concern: conflict of interest. The market is characterised by practices where a seller is the one who pays the agent’s commission. “In such cases, some realtors may inflate prices just to secure a higher cut, which ends up hurting the buyer.” He points to one of Kigali’s high-end developments as an example, where a one-bedroom serviced apartment is reportedly selling for around $87,000, fully furnished. “While it’s marketed as a reasonable price, I believe it’s actually overpriced. If I were to estimate, I’d say it should cost between Rwf 65-70 million at most. But often, property owners aim for higher profit margins than what’s truly justifiable,” he says. In different countries, governments have implemented housing protections to ensure affordability without entirely disrupting the free market. Strategies such as rent control, limit annual rent increases to protect tenants from sudden spikes, used in cities like New York and Berlin, Singapore and the Netherlands. In other countries, invest heavily in social and affordable housing, offering subsidized homes to low- and middle-income earners. Additionally, tools like property taxes and vacant home taxes, seen in cities like Vancouver, help prevent speculation and encourage efficient land use. Some countries also use inclusionary zoning, requiring new developments to include a portion of affordable units. These approaches demonstrate that housing markets can be regulated in ways that protect citizens while still encouraging private investment and growth. ALSO READ: Global real estate franchise Immobilium expands to Rwanda Still, Michelle Umurungi, the Chief Investment Officer at the Rwanda Development Board (RDB), insists that the Rwandan housing market is a free market economy, where prices are determined by supply and demand, and nobody has the power to intervene and regulate real estate prices. “However, through initiatives like the Rwanda Affordable Housing Scheme, implemented under the Rwanda Housing Authority, we create space for developers to invest in projects that are within reach for the average income earners, which is not about fixing prices, but about enabling access through targeted support,” she notes. Prioritise affordability, quality Rwanda has made efforts to expand affordable housing through projects like the Batsinda Project and Bwiza Riverside Homes, with prices starting at Rwf 16.5 million for a two-bedroom unit. There’s, however, a growing concern among potential buyers and residents about the quality and livability of these houses. Many people appreciate the lower prices, especially for middle- and low-income earners, but they also raise questions about whether these homes are being built to last or simply to tick the affordability box. “We understand that affordability is the goal, but it shouldn’t come at the expense of quality. At the very least, we deserve decent, durable houses. We shouldn't have to choose between a low price and a livable home,” says Alphonse Mugabe, a resident of Bwiza Riverside. “There needs to be a balance, while cost-saving is important, it's equally crucial to ensure that people live in safe, comfortable spaces with proper infrastructure. When affordability compromises quality, it can lead to long-term problems like higher maintenance costs or even safety risks,” he adds. Samuel Iyandemye, a member of the Institute of Real Property Valuers of Rwanda (IRPV), observes that the rising cost of houses is driven by several interconnected factors with land value driving the most part and that interfering with the market could do more harm than good. “The high prices of houses usually depend on location and other factors like transportation facilities, access to infrastructure, and general amenities. Land value itself is rising every day,” Iyandemye says. “Intervening in natural market movements disrupts the free forces of demand and supply, the very forces that determine housing prices in Rwanda,” he argues. “When the market is controlled, it can discourage investment and ultimately harm the national economy.” For Iyandemye, while price ceilings may attract some real estate investors, market control generally sends the wrong signal He also points out how inflation and currency fluctuations are affecting construction costs. “Inflation plays a major role. Most construction materials are imported, and that ties housing prices directly to the dollar. When the exchange rate goes up, so does the cost of building, and eventually, the price of the house,” he says. According to the Rwanda Inspectorate, Competition and Consumer Protection Authority (RICA), the institution does not intervene in property or land valuation, as this responsibility falls under the mandate of the Rwanda Housing Authority. RICA instead focuses on sectors that lack a dedicated regulatory body.

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Who protects consumers from unfair housing prices?