Housing sector faces severe crisis

The country’s housing sector is currently going through a deep crisis. Alongside a sharp decline in apartment sales, an abnormal rise in construction costs has put real estate companies under immense pressure. At the same time, nearly 269 construction-related products—including rods, cement, sand, bricks, and stones—are also experiencing a market slowdown. Falling sales are causing businesses to lose capital.

Industry insiders say prolonged high inflation, elevated bank loan interest rates, dollar market instability, and soaring construction material prices have created a state of stagnation in the housing sector. Many entrepreneurs are unable to launch new projects, while ongoing projects are progressing slowly. Experts believe policy support and low-interest financing facilities for homebuyers are urgently needed to help revive the sector.

According to data from REHAB, monthly apartment sales across the industry have dropped from around 1,000 units to only 250–300. Instead of the expected annual price growth of 5–8 percent, the market has become stagnant. Some projects have seen a decline of 5–10 percent in growth. The luxury apartment segment has been hit hardest, with sales in Bashundhara, Gulshan, Banani, and Dhanmondi falling by 60–70 percent.

Sector representatives say real estate is a pillar of Bangladesh’s economy, contributing around 18 percent to GDP. If this sector falls into crisis, the broader economy may also suffer serious consequences. Prices of construction materials such as rods, cement, bricks, sand, and stones have increased by nearly 30 percent.

Read More

Leather industry still a promising sector: Muktadir

Visits to various construction material markets in the capital revealed that sales have dropped by half over the last two years. Md. Ziad, manager of Jannat Enterprise at Banglamotor Tiles Market, said that business conditions have been extremely poor over the past two and a half years. Previously, daily tile sales ranged from Tk 300,000–400,000, but now they have dropped to only Tk 50,000–60,000, and some days there are no buyers at all. As a result, businesses are struggling to manage bank installments, warehouse rent, and labor costs.

Construction costs for apartments and buildings have risen by nearly 30 percent, reducing buyers’ purchasing power. The reduction in Floor Area Ratio (FAR) has also limited building heights from 8–9 stories to 5–6 stories in many cases, making landowners less interested in partnering with housing companies.

REHAB Senior Vice President Abdur Razzaq said the entire sector is under pressure, with sales dropping to only 20–25 percent of previous levels. New project launches have also declined significantly. As a result, not only developers but also thousands of businesses linked to construction materials are facing hardship. He emphasized the need for special policy support for both the housing and construction sectors.

Industry experts note that more than 169 backward linkage industries depend on the housing sector, including rods, cement, ceramics, glass, paint, bricks, electrical equipment, aluminum, wood, and sanitary products. The slowdown in real estate is directly affecting these sectors as well.

President of the Bangladesh Cement Manufacturers Association (BCMA) and Managing Director of Premier Cement, Md. Amirul Haque, said the cement industry is experiencing a severe downturn, operating at only 55–60 percent of its capacity due to low demand. He stressed the need for easier loan conditions and policy support to sustain businesses.

Housing sector entrepreneurs also say complexities in opening Letters of Credit (LCs) and high dollar prices have made importing raw materials more expensive. They believe low-interest loans, tax incentives, and easier financing could help revive the sector.

GPH Ispat Additional Managing Director Almas Shimul said the slowdown in the housing sector has severely affected the steel industry, with rod production dropping to one-third of previous levels.

Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), described the housing sector as one of the country’s key economic drivers, saying that keeping it active boosts employment, industrial production, and government revenue. He stressed the need for immediate and effective policy support.

According to Bangladesh Bank data, the maximum housing loan interest rate was 9 percent in January 2022, rose to 17 percent in January 2024, and stood at 14 percent as of April 2026. Examples from the United States show that policy support and lower interest rates can revive the housing sector. During the recession, interest rates dropped significantly, leading to a surge in home sales.

Mutual Trust Bank Managing Director Syed Mahbubur Rahman said high loan interest rates for purchasing apartments or building homes are discouraging customers from seeking bank financing. He noted that many countries have specialized housing finance institutions due to the long-term nature of such loans, whereas Bangladesh has very few such institutions. He added that government initiatives could create opportunities for affordable housing finance in the country. 

Source : Bangladesh Pratidin