Desk Report:
There has long been a demand for housing in the capital. However, despite this need, many potential buyers are now stepping back as their financial capacity to purchase flats has diminished. Consequently, flat sales and bookings in the housing market have dropped by approximately 30 to 35 percent over the past year. This has placed real estate developers under business pressure, while also raising concerns regarding the construction-related industry and the livelihoods of a vast number of workers.
According to real estate developers, a significant portion of Dhaka’s nearly 20 million residents still lack homes of their own. The slowdown in flat sales—despite such immense demand—has raised questions about the current state of the market. Experts and developers point out that there is no single cause for this; rather, the crisis has deepened due to a combination of factors: an imbalance between income and expenditure, high interest rates on loans, rising construction costs, and elevated taxes and registration fees.
While reports circulating on social media suggest a sharp decline in the prices of residential properties and land, the reality of the market is quite different. Although sales have fallen, the prices of residential units have not decreased significantly, as construction and other associated costs remain high.
Developers note that inflation has driven up the cost of daily living. Many families are under immense pressure just to cover essential expenses such as food, healthcare, education, and rent. As a result, even those who had been saving for a long time to buy a flat are now either redirecting those funds toward other urgent needs or postponing their purchase decisions.
Compounding this is the high interest rate on home loans. Prospective buyers are wary of the burden that large monthly installments would impose, leading many to avoid the risk of taking on debt to purchase a flat.
Meanwhile, the rising cost of construction materials has pushed up the overall expenses for housing projects. Developers estimate that the cost of construction materials has surged by more than 31 percent over the past year. Dr. Ali Afzal, President of REHAB (Real Estate & Housing Association of Bangladesh), stated that the overall increase in construction costs has reached approximately 43 percent.
Furthermore, taxes and registration costs have added additional pressure on the real estate sector. In the budget for the 2026-27 fiscal year, a new 15 percent capital gains tax has been imposed on the government-assessed value of flats. Furthermore, in some instances, registration costs now exceed 13 percent of the total value. REHAB, the association of real estate developers, has been advocating for a reduction in these costs.
Meanwhile, there is no significant evidence to support the claim that flat prices are declining. According to developers, the prices of residential units have risen by as much as 40 percent over the past three years. Costs related to land, labor, construction materials, and financing have not decreased; consequently, even as sales decline, developers are unable to significantly lower the prices of their flats.
As a result, the core of the crisis in the real estate market lies in the widening gap between buyer affordability and the price of flats. Despite the existence of demand, a lack of purchasing power prevents this demand from translating into effective market demand.
The downturn in the real estate sector has also impacted allied industries. There are 269 such industries—including those producing steel rods, cement, ceramics, glass, aluminum, timber, and electrical equipment—that depend on the real estate sector. According to the Bangladesh Steel Manufacturers Association, sales of steel rods have fallen by as much as 45 percent. Demand for ceramic products has dropped by 20 to 30 percent, while sales of electrical equipment have declined by up to 50 percent.
According to REHAB, the real estate sector and its associated industries provide direct and indirect employment to approximately 5 million people. The contraction in business activity has created uncertainty regarding the livelihoods of these individuals. Simultaneously, the pressure to repay bank loans is mounting; a report indicates that the rate of non-performing loans (NPLs) in the real estate sector has reached approximately 27 percent.
Beyond financial constraints, a lack of buyer confidence has emerged as a major challenge for the real estate sector. Due to allegations—such as the failure to hand over flats by the agreed-upon deadlines or the misappropriation of funds—many potential buyers have become cautious about making new investments. Consequently, merely reducing loan interest rates and taxes is not enough to revitalize the market; it is also essential to ensure transparency, accountability, and the timely handover of projects by real estate developers.
To overcome the crisis, Abdur Razzak, Senior Vice President of REHAB, has emphasized the need to develop affordable housing outside Dhaka, alongside improving transport infrastructure and civic amenities. According to economist Shahadat Hossain Siddiqui, a prolonged stagnation in construction and sales activities could have a negative impact on the broader economy. In this context, there is a need for long-term, low-interest home loans and the creation of a special financing fund.
Stakeholders argue that the current crisis in the real estate sector cannot be viewed solely in terms of fluctuations in flat prices. The core issues are the decline in buyers’ purchasing power and the stalling of sales. Unless buyer confidence is restored—alongside efforts to lower loan interest rates, construction costs, and tax burdens—the stagnation in the housing market could persist even longer.
