Macroeconomic Factors Influencing Real Estate Prices in Rwanda-Case of Kigali City Urban Areas, 2008-2017

For the past 20 years, Rwanda has experienced a rapid increase in the prices of real estate property raising concerns among policy makers and the government. The purpose of this study was to analyze the factors influencing real estate prices in Rwanda case of Kigali City Urban Areas. The study was based on three specific objectives namely to determine the influence of lending rates on real estate prices in Rwanda, to investigate the influence of inflation on real estate prices in Rwanda and lastly to assess the influence of GDP on real estate prices in Rwanda. The study adopted quantitative descriptive and correlational research designs. Quarterly time series secondary data was used for a period of 10 years from 2008 to 2017. Statistical tests of correlation, regression, unit root, cointegration and causality tests were carried out during data analysis. The findings of the study were presented in form of tables and graphs. The findings indicated that GDP and lending rates had significant influence on real estate prices whereas inflation and brokers were found to be insignificant. Lending rates had the greatest influence on real estate prices. Findings further exhibit positive association between real estate prices and lending rates, inflation and brokers while the association between GDP and real estate prices is negative. The study recommends financial institutions to reduce interest rates charged on mortgage loans in order to lower the cost of construction hence encouraging investments in the real estate sector. In addition the government should strive to achieve greater economic growth rate by encouraging investments in real property, increased supply hence reduced property prices.