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High-rise residential buildings under construction in Dhaka
Demand for housing in the capital has remained high for years. However, despite the growing need for accommodation, many prospective buyers are stepping back as their financial capacity to purchase flats continues to decline. As a result, flat sales and bookings in the real estate market have dropped by around 30 to 35 per cent over the past year.
The downturn has put real estate companies under considerable business pressure while raising concerns over the construction industry and the livelihoods of millions of workers dependent on the sector.
According to real estate entrepreneurs, nearly two crore people in Dhaka still do not have their own homes. Despite this huge unmet demand, the slowdown in flat sales has raised questions about the current state of the housing market.
Experts and industry operators say the crisis has no single cause. Rather, the imbalance between household income and expenditure, high interest rates on housing loans, rising construction costs, and increased taxes and registration fees have collectively deepened the situation.
Although various claims about sharp declines in apartment and land prices have been circulating on social media, the actual market situation tells a different story. While sales have fallen, apartment prices have not declined significantly because construction costs and other expenses remain high.
Real estate entrepreneurs say inflation has increased people's daily expenses. Many families are struggling to meet basic costs, including food, healthcare, education and house rent. As a result, many prospective buyers who had been saving money for years to purchase flats are now spending those savings on essential needs or postponing their buying decisions.
High interest rates on housing loans have added to the problem. The burden of monthly instalments on large loans is also influencing buyers' decisions. Consequently, many people are reluctant to take the financial risk of purchasing flats through bank loans, despite their housing needs.
Meanwhile, rising prices of construction materials have increased the overall cost of housing projects. According to industry estimates, the cost of construction materials has increased by more than 31 per cent in a year. Dr Ali Afzal, president of the Real Estate and Housing Association of Bangladesh (REHAB), said overall construction costs had risen by around 43 per cent.
Taxes and registration fees have also created additional pressure on the housing business. The budget for the 2026-27 fiscal year introduced a new 15 per cent capital gains tax on the government-assessed value of flats. In addition, registration costs exceed 13 per cent of the total property value in some cases.
REHAB has been demanding a reduction in these costs to ease the burden on both buyers and developers.
There is also little substantial evidence to support claims that flat prices have fallen significantly. According to information provided by real estate entrepreneurs, prices of residential units have increased by up to 40 per cent over the past three years. Land prices, workers' wages, construction materials and financing costs have not declined. As a result, developers say they are unable to reduce flat prices significantly despite falling sales.
The central problem in the housing market is now the widening gap between buyers' purchasing capacity and apartment prices. Although demand for housing exists, the financial constraints of prospective buyers are preventing that demand from translating into effective market demand.
The slowdown in the real estate sector has also affected a wide range of related industries. Around 269 supporting industries, including steel rods, cement, ceramics, glass, aluminium, timber and electrical equipment, depend on the housing sector.
According to the Bangladesh Steel Manufacturers Association, rod sales have declined by as much as 45 per cent. Demand for ceramic products has fallen by 20 to 30 per cent, while sales of electrical equipment have dropped by up to 50 per cent.
REHAB estimates that around five million people are directly and indirectly employed in the real estate and related industries. The decline in business activities has created uncertainty over the livelihoods of these workers. At the same time, pressure on loan repayments has increased. A report on the sector has put the defaulted loan rate in the real estate industry at around 27 per cent.
Apart from financial difficulties, declining buyer confidence has emerged as another major challenge for the housing sector. Allegations of developers failing to hand over flats within the stipulated time or misappropriating buyers' money have made prospective investors more cautious about new investments.
Therefore, restoring market confidence will require more than reducing loan interest rates and taxes. Ensuring transparency and accountability among real estate companies, along with timely handover of housing projects, is also essential.
Abdur Razzak, senior vice-president of REHAB, has emphasised the need to develop affordable housing outside Dhaka while improving transport networks and civic amenities.
Economist Shahadat Hossain Siddiqui said prolonged stagnation in construction and sales activities could have negative consequences for the overall economy. He stressed the need for long-term housing loans at lower interest rates and the establishment of a special financing fund to support the sector.
Industry insiders believe the current housing crisis cannot be assessed simply in terms of whether flat prices are rising or falling. The fundamental problem is the declining purchasing power of buyers and the slowdown in sales.
Unless pressure from loan interest rates, construction costs and taxes is reduced and buyer confidence is restored, the stagnation in the real estate market could continue for a prolonged period.
https://thedailyexpress.news/news/business/1f1de774-c53c-6970-8b57-85b22f175f48