House rent triggers high cost of living in Kigali

A housing estate in Kigali. Both middle and low-income earners in urban areas are stretching their shrinking budgets to cover housing needs. PHOTO | FILE  

In Summary

• House rent in Kigali is increasingly becoming expensive as landlords factor transfer costs to tenants.
• Middle and low-income earners in urban areas stretching their budgets to cover housing needs.

By KABONA ESIARA
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Household budgets are still under pressure as high utility, housing and transport related costs remain high, despite easing food prices.

The National Institute of Statistics of Rwanda (NISR) reported 0.9 per cent year-on-year inflation from 0.7 per cent in February this year in its March Consumer Price Index.

“In March 2018, housing, water, electricity, gas and other fuels and transport rose by 2.2 per cent, and 3.8 per cent respectively,” the NISR report shows.

Both middle and low-income earners in urban areas are stretching their shrinking budgets to cover housing needs, which analysts say eat up almost 50 per cent of their budgets. The house rent in Kigali is increasingly becoming expensive as landlords factor transfer costs to tenants.
The housing costs recorded by NISR increased from 0.1 per cent in February to reach 2.2 per cent during the period under review.

While NISR does did not give reasons for the increase in the cost of housing, realtors cite taxes on fixed properties, high cost of construction materials like cement and shortage of supply for the ever increasing prices.

“I used to pay Rwf35,000 ($40) for a one-bed-room house near Rwanda Development Board. But when l moved out, the rent increased by 15 per cent per month,” said Jean Claude Habyara.

Charles Haba, a relator at Century Real East says the shortage of housing in Kigali City is partly responsible for the ever appreciating prices.

He further cites extension of water, electricity, tarmac roads and fibre optic in city to residential areas which never used to have those services as also responsible for high housing prices.

Energy cost

According to analysts, High energy cost in the country is another burden to manufacturers, energy utility companies and businesses.

The cost of energy increased to 5.8 per cent on annual change and 0.8 per cent on a monthly basis after Rwanda Utilities Regulatory Authority in January this increased fuel pump prices.

The price of a litre of petrol increased to Rwf1,042 ($1.21) from Rwf1,031 ($1.20), while diesel currently costs Rwf1005 per litre from Rwf944 per litre.
Charcoal, which is widely used as source of fuel increased from Rwf9,000 ($10) last in March to Rwf14,000 ($16) per bag in some parts of the city.

However in general, the NISR report shows that inflation pressure remained subdued in March following the good agricultural harvest which eased food prices.

Both the National Bank of Rwanda and International Monetary Fund experts project the general inflation to remain subdued this year, which will result tin a strong economic growth.

“Looking forward, growth is expected to return to between 7 and 8 per cent in 2018 to 2019. Inflation should pick up slowly over this period, but stay within the target range of 5 per cent.

Continued exchange rate flexibility should ensure that Rwanda’s exports remain competitive and the ample availability of foreign exchange in the economy,” said Laure Redifer in a statement after IMF Staff completed its review mission to Rwanda.