BRD Study: Housing Market and Low-Cost and Efficient Building Materials and Technologies: The Housing Asset Triangle

Residential property is the largest and most differentiated asset within any country, and a significant part of a nation’s economy, especially insofar as it relates to household wealth, livelihoods, and the prospect of inclusive growth. As the property market grows and develops, housing can be an instrument of economic transformation, with property values growing faster than inflation and offering leapfrog opportunities to lower income households as they benefit from the appreciation of their housing asset. This creates demand for further housing services – home improvements, extensions, the construction of new housing – and in this, housing is significant as a growth sector for the economy. With this, further opportunities to leverage property with finance arise, supporting the development of small businesses, so important in the context of low employment. At the same time, this activity contributes to a growing revenue base for the government at the municipal level, and improves the city’s ability to invest in further growth and deliver appropriate services to the breadth of its population.

The question of market performance – the value that housing realises for both the household and the nation – is important. Housing is an asset. For households, it is likely to be the most significant investment that they will make in their lifetimes. In Rwanda, given the public emphasis on affordable housing, it is also a significant investment for the State. By engaging at the level of the housing market, and not restricting focus simply to the delivery of housing, the state can leverage the virtuous cycles that arise from housing investment, whether by the state or the household. While households invest in their properties (whether formally or informally) they improve its performance particular to their social, financial and economic needs. At the same time, while the state invests in the growth and development of an affordable housing sector, it improves the overall performance of the housing sector, both to deliver good and affordable housing, while also to realise broader goals of economic growth and job creation, financial intermediation and the realisation of sustainable human settlements.

These two broad objectives: maximising the performance of the house as a private asset, and maximising the performance of the housing sector as a national asset, are discussed further in the brief attached below.

This brief forms part of a collection of fact sheets on Rwanda’s Affordable Housing Market commissioned by the Development Bank of Rwanda on behalf of the Ministry of Infrastructure and the Rwanda Housing Authority. The information is drawn from the Study on the Housing Market and Low-Cost and Efficient Materials and Technologies
conducted by the joint venture of Lambert Lénack Architectes Urbanistes and 35 000 Holdings (trading as 71point4), in partnership with Fatou Dieye (project lead), Vincent Ngirabacu, Kigwa Consulting and James Setzler from GAC-R with advising from Kecia Rust of the Centre for Affordable Housing Finance in Africa (CAHF).