Owning a home in Kigali: Should we even bother?

A few weeks back, I wrote an article in which I tried to articulate the ‘Rwandan Dream’. Among the many comments I received on the subject, one particular common thread kept appearing over and over again. That was the issue of owning a home. According to my peers who commented, if they didn’t own a home outright, they’d feel like they failed to reach their Rwandan Dream.This is why I found the article that ran yesterday in this very newspaper extremely thought provoking. Titled ‘Will you ever own a home in Kigali?’ it sought to highlight the issue of the shortage of affordable housing for the lower, middle and upper middle class. The article revealed several statistics that I personally found very interesting.Firstly, I didn’t know that, according to the 2012 ‘Housing in Kigali’, an average middle-class home in Kigali costs approximately Rwf 70 million. I found that absolutely insane. Especially, as the writer pointed out, the average middle-class incomes range from Rwf200,000-Rwf 600,000 per month.Everyone involved with the housing industry attempted to figure out a way out of the impasse. The Chairperson of the Institute of Real Property Valuers in Rwanda, Egide Gatsirombo, is quoted blaming the cost of construction materials for the high costs.’“As long as the demand for posh houses is still high, developers will always rush for that category since that is where they reap big. If you consider the cost of land and construction materials, houses will definitely be expensive,” he said.Of course, as I’ve gotten used to whenever this issue comes up, some people are calling for government intervention. Charles Haba, the president of the Real Estate Association of Rwanda, is one of them. ‘“If government made the first move, it would bridge the gap and investors would venture into affordable housing”, he opines. I disagree.Even if, as Mr. Gatsirombo believes, the cost of normal middle-class housing fell from seventy million to a more sane 20-25 million Rwandan Francs (which will never, ever happen), I highly doubt whether the issue of home ownership would change.The same fundamental issues would still remain and these are; low wages and high interest rates on mortgages.Let’s examine this scenario: Tom graduates from university and gets a job at an NGO. He meets a lovely lady, gets married and together with his bride, negotiates a mortgage deal with his bank for an average-looking three bedroomed house in Kagarama because he is too poor to buy it outright.The house costs Rwf80 million and the interest rate on the loan is 20 per cent, as is the norm. Fast forward a few years down the road. Tom gets laid off. What happens next? The bank kicks him out of this home, auctions it to the highest bidder, and he has to start from scratch.That is what is happening to a lot of people. I mean, even if they aren’t being fired from their jobs, they are staying in jobs that they hate simply because they cannot afford to quit because they NEED the monthly salaries to pay the mortgage.I have an idea. Instead of, frankly, killing ourselves to own a piece of property, perhaps it would be wiser if we rented instead. I mean, what is the point of paying more money per month on a 20-year mortgage, than you would pay if you rented that very same property? First of all, you wouldn’t be at the mercies of both your employer and the bank. Secondly, if you chose to change jobs or careers, money wouldn’t have to be the biggest concern.Instead of wracking your brains to figure out how to follow your dreams AND earn a lot of money at the same time (which sometimes, nay very often, two different things), you could simply move into a cheaper rented property and reduce your costs. Throw in the fact that as a tenant, you don’t have to undertake costly repairs on a house, and renting would seem a no brainer.Kigali is a renters market and not a buyers one. To keep pretending that it is, or that it will magically become one, is silly. It simply doesn’t make sense for us to want home loans.So, to the question, should we bother to own a Kigali home I answer ‘“no”. Perhaps we need to align the Rwandan Dream with the Rwandan Reality.The writer is a journalist with The New Times and post-graduate student

Opinions

Owning a home in Kigali: Should we even bother?