1. Country Situation paper BANGLADESH Presented by:
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: Square Km
Population: 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. Dhaka’s population growth rate is the highest among the major cities in the world.
AFFORDABLE HOUSING IS BROADLY DEFINED AS THAT WHICH IS ADEQUATE IN QUALITY AND LOCATION AND DOES NOT COST SO MUCH THAT IT PROHIBITS ITS OCCUPANTS MEETING OTHER BASIC LIVING COSTS OR THREATENS THEIR ENJOYMENT OF BASIC HUMAN RIGHTS. HOUSING AFFORDABILITY, HOWEVER, IS MULTI-DIMENSIONAL AND INVOLVES MORE THAN THE OFTEN-USED SIMPLIFIED CONCEPTION OF THE RATIO OF HOUSE PURCHASE PRICE TO HOUSEHOLD INCOME.

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.
Bangladesh’s 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. Private Sector Organization
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. Regulatory Environment in the housing finance
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 groups—but 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.
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.

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/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.

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. Thank you