As a result of massive urbanization and economic underdevelopment,rnhousing shortages and poor housing conditions remain as a norm forrnmajor cities in developing countries. These housing crises have resultedrnin the emergence of squatter settlements and slum areas in and aroundrnpoor countries’ urban centers, further exacerbating nascent strains onrnquality of life. The majority developing countries’ populations are too poorrnto afford housing costs and hence government intervention in the form ofrnproviding low-cost (subsidized) housing is common. Ethiopia’s capital,rnAddis Ababa, faces these chronic housing problems and the lower andrnmiddle-income groups are subject to various social and economicalrnchallenges as a result. This study assesses the prospects and challengesrnof the government low-cost housing projects and to suggest possiblernoptions and scenarios to alleviate the city’s chronic housing problems.rnThe research uses the beneficiaries of low-cost houses and the concernedrngovernmental offices as sources of data. The findings of the researchrnshow that the low-cost hosing projects of the city failed to solve thernhousing problems of the poor and the projects were not completedrnaccording to the time schedule as a result of the shortage of constructionrnmaterials. On the other hand, the absence of a national housing policyrnhad its own impact for the failure of the projects. Accordingly, the paperrnpresents the overall assessment of the achievements and challenges ofrnlow-cost housing and finally provides possible suggestions for thernassuaging the prevailing problems