Flat sales fall up to 35 percent in a year as buyers' means and prices drift apart

Huge numbers of people in the capital dream of owning a flat, and there is no shortage of buyers; yet the country's housing business has fallen into a deep slump. Flat sales and bookings have dropped by about 30 to 35 percent over the past year. The downturn has put not only housing companies but many construction-linked industries and the jobs of millions at risk.

By traders' estimates, about two crore people in Dhaka do not own a home. With such enormous demand, the stagnation in flat trading has raised questions. Claims spreading on social media that residential building and land prices have fallen sharply do not match reality; sales have slowed, but construction and other costs keep residential unit prices high.

Housing entrepreneurs say several causes are working together. Rising living costs have shrunk ordinary people's savings. Many families are struggling just to meet regular expenses such as food, healthcare, education and house rent, so even people who saved for years to buy a flat are now stepping back from the plan.

High interest on home loans has added to this. Weighing the pressure of repayments, a section of prospective buyers does not want to borrow large sums. At the same time, costlier construction materials have made projects more expensive to implement. Traders put the rise in construction material costs at more than 31 percent in a year, while REHAB president Dr Ali Afzal claims overall construction costs have risen by about 43 percent.

Taxes and registration costs have created further pressure. The 2026-27 budget imposed a fresh 15 percent capital gains tax on the government value of flats, and in some cases registration costs exceed 13 percent of the total price. REHAB, the housing traders' association, has been demanding that these costs be reduced.

There is, however, no significant evidence that flat prices have actually fallen. By entrepreneurs' figures, residential unit prices have risen by up to 40 percent over the past three years. With land, labour, materials and financing costs not coming down, companies cannot adjust prices even as sales fall — leaving the market's core problem as the gap between buyers' financial means and flat prices.

The stagnation has spread to other construction-linked businesses. As many as 269 allied 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 fallen by up to 45 percent; ceramic demand is down 20 to 30 percent, and electrical equipment by as much as 50 percent.

REHAB estimates that housing and its allied industries employ about 50 lakh people directly and indirectly, and the slowdown has raised concern over their livelihoods. Repaying bank loans has also become difficult — one related report puts the sector's non-performing loan rate at about 27 percent. Complaints of flats not being handed over on time and of money being embezzled have also created a crisis of trust among buyers.

To overcome the crisis, REHAB senior vice-president Abdur Razzak has stressed building affordable housing outside Dhaka and improving transport and civic facilities. Economist Shahadat Hossain Siddiqui says prolonged stagnation in construction and sales will hurt the wider economy, and that low-interest long-term home loans and a special financing fund are needed. Overall, unless loan interest, construction costs and tax pressure ease and buyers' trust is restored, the situation risks dragging on.