2016年-世界发展银行全球_Barriers_Constraining_the_Low_and_Middle_Income_Housing_Finance_Market_in_Bangladesh_72页_2mb

Summary of Barriers Constraining the Low and Middle Income Housing Finance Market in Bangladesh

Core Content

This report by the World Bank Group (WBG) and the International Finance Corporation (IFC) analyses the barriers constraining the low and middle income housing finance (LMIHF) market in Bangladesh. It highlights the challenges in both the supply and demand sides of the housing finance ecosystem, evaluates the current structure of the market, and proposes strategic interventions to improve access to housing finance for lower and middle income segments.

Main Objectives

• Assess current and future demand for LMIHF in Bangladesh
• Identify constraints to the development of the LMIHF market
• Develop recommendations and a roadmap for stakeholders to address these barriers
• Propose strategic interventions to enhance the housing finance ecosystem

Key Findings and Views

1. Demand for LMIHF

• Definition of LMIHF: Households with a monthly income of up to BDT 60,000 (USD 760) are considered low and middle income.
• Projected Demand: The gross projected annual housing finance demand from LMIHF segments (urban, rural, and microfinance borrowers) is estimated at BDT 205 billion (USD 2.6 billion), translating to BDT 820 billion (USD 10.4 billion) over the next four years.
• Current Supply: Only around 25,000 housing units are supplied annually, with REHAB's member developers contributing about 15,000 units.
• Demand Distribution: Most of the housing finance demand is concentrated among lower and lower-middle income groups.
• Microfinance: Despite a thriving microfinance sector, housing microfinance (HMF) products are almost non-existent, with micro-lenders like Grameen Bank scaling back their housing loan portfolios.

2. Housing Conditions and Supply

• Urbanization Trends: Urbanization is still unsaturated, with Dhaka as the most urbanized district due to its agglomeration economy. Dhaka's population is expected to grow from 18.9 million in 2011 to 27.4 million by 2030, with an average growth rate of 4.3%.
• Housing Deficit: Over 85% of rural and 70% of urban dwelling units are in inadequate or deficient conditions.
• Construction Costs: Construction costs in Dhaka and other metropolitan cities have increased significantly, with a 20–25% correction in recent years, but prices remain high.
• Real Estate Market: The real estate sector is still recovering from the 2011–2012 crisis. Private developers cater mainly to upper and upper-middle income groups, leaving the middle and lower income segments largely untapped.

3. Housing Finance Market Structure

• Lenders: The housing finance market is dominated by commercial banks, which account for 75–80% of the gross housing loan portfolio.
• Loan Outstanding: As of June 2015, total housing loans outstanding were BDT 490 billion (USD 6.2 billion), representing only 8.8% of total credit to the private sector.
• HBFC's Role: The Bangladesh House Building Finance Corporation (HBFC), a traditional lender, has a declining market share and is financially precarious, relying on loan recoveries and not regulated by Bangladesh Bank.
• NBFCs: Non-bank financial companies (NBFCs) have a relatively low portfolio quality, with non-performing loans (NPLs) rising to 10.7% in FY15, mainly due to real estate and construction finance exposure to developers.

4. Constraints and Policy Environment

• Regulatory Issues: The regulatory framework is inefficient, particularly in areas like foreclosure, land administration, and legal infrastructure.
• Financial Sector Weakness: The mortgage market is underdeveloped, with mortgage debt to GDP at only 3%, and long-term capital markets are limited.
• Supply Side Constraints: There is a lack of affordable housing supply, with only 2% of newly constructed apartments being affordable.
• Access Challenges: Low-income groups, especially those without formal income sources, face significant barriers in accessing housing finance.
• Market Penetration: The penetration of traditional mortgage finance is minimal, and low-income housing finance is almost non-existent.

5. Recommendations and Strategic Interventions

• Policy Reforms: Develop sound and balanced prudential regulations, introduce innovative housing finance products, and enhance mortgage affordability.
• Islamic Housing Finance: This could be a potential solution for underserved segments.
• Secondary Market Finance: Focus on secondary market finance and mortgage refinancing to support long-term funding and market stabilization.
• Government and DFI Support: A roadmap for strategic interventions is proposed, involving collaboration between the Government of Bangladesh (GOB), international development finance institutions (DFIs), and donor organizations.
• Infrastructure Development: Improved land planning, urban development policies, and access to developed land are essential to lower real estate prices.
• Enabling Environment: Create an enabling environment for primary lenders and affordable housing suppliers to expand their presence in lower and middle income segments.

Key Information

• Prevailing Exchange Rate: 1 USD = 79 BDT
• GDP Growth: Bangladesh has achieved an average annual GDP growth of over 6% in the past five years, despite global and domestic challenges.
• Inflation: The 12-month moving average inflation decreased from 7.6% in 2014 to 6.8% in 2015.
• Fiscal Deficit: Maintained at 3.1% of GDP in FY14.
• Housing Loans: As of June 2015, total housing loans outstanding were BDT 490 billion (USD 6.2 billion).
• Non-Performing Loans (NPLs): NPLs for NBFCs were at 1.87% in 2015, but rose to 10.7% in FY15 due to real estate exposure.

Conclusion

The report emphasizes the urgent need for reforms and strategic interventions to expand the LMIHF market in Bangladesh. It outlines the current challenges in the financial sector, the supply and demand dynamics, and the importance of a supportive policy environment and innovative financial products to meet the housing needs of lower and middle income households.