Transcript Document

NHB-APUHF conference on
‘Growth with Stability in the Affordable Housing Markets’
Country Situation paper
BANGLADESH
Presented by:
Chowdhury Mohidul Haque
Executive Director
Bangladesh Bank
Delhi, India
29, January-01 February, 2012
Bangladesh & Asia Pacific Region
Basic information on Bangladesh
Location: South Asia (member of the SAARC)
Area: 144000 Square Km
Population: 162.22 million(2009 estimate)
Population Density: 1127/square Km
Urban population as % of total population: 27.6
Urban population growth rate: 3%
GDP [current price and million USD]: 89159
GDP growth rate: 6.3% [2010]
GDP per capita [current price in USD]: 692 (2009)
Housing demand: 5 million , 0.5 million in urban and 3.5
million in rural being added annually
• Main exports: Garments, fish, jute goods, leather products
• Main Crops: Rice, Jute, Wheat, Vegetable, Maize and potato
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Houses in Bangladesh
Slums, streets & planned residential area
Background
• Housing refers to the arrangement or provision of places to live.
The sum total of policy framework, institutional infrastructure and
regulatory environment provides the frame work of a country.
• Housing Finance is the institutional arrangement (public and
private) for financing housing.
• Affordable housing is broadly defined as housing that is adequate
in quality and location and does not cost in such a way that it
restricts meeting other basic living cost.
• Bangladesh is a developing country in this region and has planned
to become middle income country by 2015.
• The urban population constitute almost 28% of the total population
and is increasing by 3.5% annually. Dhaka’s population growth
rate is the highest among the major cities in the world.
Background
• Rapid and sustained urbanization and population growth
in the country are fuelling the demand for well- located,
adequate and affordable housing.
• Bangladesh is home to over 160 million people of whom
around 31.5% is poor, who require more personalized
housing solutions as existing market terms are not always
affordable to them.
• Challenge of affordability is not new to Bangladesh but the
need for instituting a supportive institutional framework
and increase the supply of affordable land and housing is
still a daunting task.
• Housing and housing finance services have the huge
potential to be expanded to middle- and even lower- income
families both in the urban and rural areas.
Demand for Housing
• Enhanced private sector role in the housing market would free
government resources for other priority social and economic needs.
• Bangladesh’s housing market is characterized by a surplus of upperincome group housing stock and shortage of affordable housing for the
great majority of middle and lower-income population groups
• Estimates suggest a shortage of about 5 million houses in Bangladesh,
with as many as 500,000 houses added annually in urban areas and 3.5
million added in rural regions
• There is great demand for houses of moderately priced;
• Comprehensive market-based demand studies are not available, and
there is a need for further research on the housing demand of lower- and
medium-income groups.
Housing and Housing Finance in
Bangladesh- Policy Framework
• Housing is treated as a basic right in our
constitution
• Government provides housing facility to all
groups of people
• National Housing policy has been drafted
recently and is now open for public comments
• Draft housing policy has the objectives of
– Sustainable and affordable housing for all
– Incorporation of public, private, cooperative, NGOs
and community organizations in housing initiatives
– Special emphasis to disadvantaged and poor
members of the society in housing
– Special emphasis to housing for women at work
Housing and Housing FinanceInstitutional Infrastructure
• Bangladesh
has
infrastructure for
Finance
excellent
institutional
housing and housing
– Public sector institutions
• Ministry of housing and works
– National Housing Authority (NHA)
– City development Authority (RAJUK, CDA, KDA etc.)
• Bangladesh House Building Finance Corporation
(BHBFC)
• National Housing and Building Research institute
• Directorate of architecture
• Ashrayan Project
• Grihayan Tahbil (Housing Fund)
Cont.
• Private Sector Organization
– Developers
• Land developers
• Builders
– MFIs
• Centre for urban Studies(CUS)
Housing and Housing FinanceRegulatory Environment
• General regulatory environment regarding
housing
– legal and regulatory framework concerning the
housing and real estate development includes
laws such as
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Building Construction Act (1952),
Town Improvement Act (1953),
Dhaka Master Plan (1959) and
Building Construction Rules (1984).
– National Building code
construction specification
(1993)
regulates
Cont.
• Regulatory Environment in the housing
finance
– Prudential regulations for housing finances by
banks and NBFIs
• These regulations allows and promotes lending to
housing (not for land purchase).
• Housing finances are done by state owned, private
commercial banks and as well as specialized
housing finances company both in the public
sector(BHBFC) and private sector (DBH)
Initiatives for affordable housing by
Government
• A very large segment of urban house is provided by the private
house development companies.
• Government initiated housing supply basically cater for the
government officials, middle income and lower middle income
group in Dhaka as well as other major city of the country (RAJUK,
National Housing Authority).
• For low income rural housing need government has taken many
initiatives like Ashrayan Project, Ekti Bari Ekti Khamar (one house
one farm) and Gore Fhera Kormosuchi (Back to home program)
• Grihayan Tahbil also work for low income affordable housing by
providing long term low interest bearing finances
– Apart from government efforts some NGOs and MFIs fund selfconstruction for lower-income groups—but on a far smaller scale,
relative to the existing need.
Housing Finance market -Bangladesh scenario
• The housing finance market is characterized by
– High interest rate
– Limited term lending
– Insufficient fund from the public financial and specialized financial
institutions
– Lack of transparency
• The legal, regulatory, and taxation frameworks are not
sufficiently enabling for the development of primary and
secondary housing finance markets.
• Bangladesh’s ratio of housing finance to GDP is less than 5
percent.
• Mortgage finance from private banks and specialized lenders is
available only to urban households with high incomes (more
than Tk 40-50,000 a month).
• Plenty of multistoried buildings for residents in urban areas
specially in big cities like Dhaka, Chittagong, Khulna, Cox’s
Bazar.
Cont…
• Government-subsidized
housing
finance
through the Bangladesh House Building
Finance Corporation (BHBFC) targeting lowerand lower-middle income groups.
• Outreach of Grihayan Tahbil, Ashrayan, Ghore
Phera, and Ekti Bari Ekti Khamar is very limited
• That leaves a large lower-income housing
market completely unaddressed, despite
currently high growth rates of housing finance.
Increasing affordability
• Hindrance
– Lack of balanced funding models,
– Absence of diversified instruments,
– Absence
of
separate
prudential
regulations/guidelines for the sector, and
– Lack of affordable mortgages based lending
• Positive aspects:
– Islamic finance could help to enhance access to
underserved market segments.
– Public-private
partnerships
and
creative
cooperative solutions are promising.
Way forward
• Bangladesh need reforms in the field of Housing Finance to cope up with
the growing demand. Reforms should
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improve regulatory enforcement and property registration.
prudential norms customized to housing finance,
a more effective collateral regime,
improved availability of housing and mortgage information,
• Policy interventions needed in the following area
– Finalizing the National Housing Policy;
– The revamping of the Bangladesh House Building Finance
Corporation(BHBFC)
– Increasing supply of housing stock for homeless, lower and lower middle
income people of both rural and urban areas
– the promotion of long-term financing via a refinancing facility and
– A national savings-for-housing scheme, and
– The encouragement of a secondary housing market.
Thank you