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Country Situation paper

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NHB-APUHF conference on Growth with Stability in the Affordable Housing Markets Country Situation paper BANGLADESH Presented by: Chowdhury Mohidul Haque – PowerPoint PPT presentation

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Title: Country Situation paper


1
  • 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
2
Bangladesh Asia Pacific Region
3
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

4
Houses in Bangladesh
5
Slums, streets planned residential area
6
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. Dhakas population growth rate is the
    highest among the major cities in the world.

7
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.

8
Demand for Housing
  • Enhanced private sector role in the housing
    market would free government resources for other
    priority social and economic needs.
  • Bangladeshs housing market is characterized by a
    surplus of upper-income 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.

9
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

10
Housing and Housing Finance- Institutional
Infrastructure
  • Bangladesh has excellent institutional
    infrastructure for housing and housing Finance
  • 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)

11
Cont.
  • Private Sector Organization
  • Developers
  • Land developers
  • Builders
  • MFIs
  • Centre for urban Studies(CUS)

12
Housing and Housing Finance-Regulatory Environment
  • General regulatory environment regarding housing
  • legal and regulatory framework concerning the
    housing and real estate development includes laws
    such as
  • Building Construction Act (1952),
  • Town Improvement Act (1953),
  • Dhaka Master Plan (1959) and
  • Building Construction Rules (1984).
  • National Building code (1993) regulates
    construction specification

13
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)

14
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 self-construction for lower-income
    groupsbut on a far smaller scale, relative to
    the existing need.

15
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.
  • Bangladeshs 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, Coxs Bazar.

16
Cont
  • Government-subsidized housing finance through the
    Bangladesh House Building Finance Corporation
    (BHBFC) targeting lower- and 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.

17
Increasing affordability
  • Hindrance
  • Lack of balanced funding models,
  • Absence of diversified instruments,
  • Absence of separate prudential regulations/guideli
    nes 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.

18
Way forward
  • Bangladesh need reforms in the field of Housing
    Finance to cope up with the growing demand.
    Reforms should
  • 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.

19
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