The school teacher Habiba Akter and private service holder Atiqur Rahman couple dreamt of owning a flat in Dhaka immediately after their marriage back in 2010. Almost twelve years have passed, and yet their dream remains elusive because of skyrocketing prices of flats.
"When we could have managed some money to buy a flat, we would have found the price gone beyond our affordability. It happened again and again," Habiba Akter shared about their futile attempts.
"Our savings are getting smaller day by day against the soaring flat prices. Moreover, a big portion of our income goes to house rent," she told The Business Standard while expressing her disappointment over their unfulfilled dream.
The couple is one of hundreds of thousands of people in lower and middle-income groups whose dreams of having their own homes in the megacity of Dhaka remain elusive.
"At least 80% of people living in Dhaka are unable to own flats and remain tenants year after year," said Ghulam Rahman, president of the Consumers Association of Bangladesh.
Spiralling prices of flats and land and uncontrolled house rents are the reasons behind the situation, he believes.
"Tenants need to pay 60% of their earnings for paying rents only," he told TBS.
According to a recent study by the Institute for Planning and Development, Dhaka's land prices surged by up to 2,740% or over twenty-seven-fold in the past 21 years – from 2000 to 2021 – while flat prices increased by 716% or over seven-fold.
The land and flat prices increased much at Gulshan, followed by Dhanmondi, Shantinagar, and Uttara.
"A lack of proper city development plans, ineffective regulations and lack of government initiatives for ensuring housing for all contributed largely to the skyrocketing prices of land and flats in Dhaka," said Adil Muhammad Khan, executive director of the Institute for Planning and Development.
The price of a one-katha plot of land in Gulshan area was only Tk25,000 in 1975, which reached nearly Tk1 lakh in 1990, according to the Bangladesh Bank's Monetary Policy Review Report. The price jumped to Tk5 crore in 2020.
Sector insiders say the land and flat prices increased much in some areas due to planned development, and modern civic amenities there. In the rest areas, the price increased due mainly to scarcity of land against the increased population – a mismatch in supply and demand.
"Price hikes of construction materials are also a reason behind the surge in apartment prices," said Alamgir Shamsul Alamin, president of the Real-Estate and Housing Association of Bangladesh.
Real estate developers, mostly private sector firms, also blamed high registration fees and interest rates for home loans for the increased price of flats and plots.
Scarcity of land against growing population
The megacity of Dhaka with its 3.2 lakh holdings accommodates around 1.2 crore people, according to the National Population Research and Training Institute.
Of them, only 20% of people live in their own homes and the remaining 80% live in houses on rental basis.
The population of Dhaka increases by 5 lakh every year on an average, according to the Bangladesh Bureau of Statistics, while development authorities – Rajdhani Unnayan Kartripakkha or Rajuk – approves the designs of around 2,500 new buildings per year.
If each building has six floors and two units per floor on average, around 30,000 new flats are being built in Dhaka every year. If five people on average live in each flat, then around 1.5 lakh people are being housed in those flats every year, the bureau officials estimate.
The large difference between supply and demand in the sector is quite obvious, which in turn, contributes to the skyrocketing price of plots and flats in Dhaka.