Accommodating the urban population

Saleh Akram | Published: April 08, 2016 00:00:00 | Updated: February 01, 2018 00:00:00

Housing in all major cities of densely populated countries has always been a pain in the neck for the governments. In some places, accommodation is aplenty, but both the sale value and rent of residential accommodation are sky-high. Again there are places where housing facility is far below requirement. The situation is being further aggravated by rising population and inter-country migration. For developing countries another factor contributing to housing crisis in major cities is increasing migration from rural to urban areas. Bangladesh is a glaring example.
The urban population of Bangladesh is over 40 million and is increasing at a rate of 2.5 per cent annually. Sixty per cent of the urban population lives in city corporations, with majority of them residing in those of Dhaka and Chittagong. Although urbanization continues in almost all cities, the rate of urbanization is relatively much higher in Dhaka and Chittagong metropolitan areas. To accommodate the swelling influx of rural migrants, unplanned rapid urbanization is taking place around the major cities adversely affecting the social and natural environment and putting the existing infrastructure and services under serious pressure. It is reported that about 200,000 people migrate to Dhaka every year. About 40,000 houses are required annually to accommodate the migrating population only. Â
In view of sky-high prices, most people from middle class and lower middle class who cannot afford to buy residential space for them are compelled to live in rented premises. In addition, a large portion of lower class people living below the poverty line are huddled together in slums. Lack of interest of the real estate companies to develop housing projects for middle class and lower middle class has further aggravated the situation over the years.
At present, demand for housing in large cities is generally met by three sources: (a) personal initiative, (b) real estate or property developers and (c) government initiative, although government participation is negligible, only 7.0 per cent. The rest of the demand is mostly met by the developers. Again, bulk of the housing facilities offered by the developers is beyond the purchasing power of the middle class and is targeted for rich and higher middle class people who are limited in number.
Understandably, it is not possible for the government alone to provide living space for the increasing population. But there are ways to do it and the government has a major role to play in this respect. The concept of PPP may be successfully applied. It can also undertake low-cost housing schemes which the developers driven by profit motive are generally reluctant to pursue. Under PPP, if the government offers land, price of housing shall fall dramatically. To give it a further boost, the government may direct the finance ministry to extend loans at a lower rate of interest to aspiring builders of low cost housing. In this way, the government on the one hand under its own initiative and in partnership with private sector entrepreneurs can construct and supply low priced settlements and on the other hand may allow people to avail loans at reduced rate of interest and build houses of their choice at a lower cost. Loans at lower interest rate may also be offered to housing companies but a condition should be attached under which they will be liable to dedicate a specified portion of their projects for construction and supply of low-cost apartments and houses.
A separate plan with a number of short and long-term schemes has to be chalked out to ensure housing for all. At the same time, capacity of the government organisations are to be strengthened and special fund should be allocated to empower the housing sector. As land value is the prime cause for high price of housing in Dhaka, with the government providing land through partnership shall greatly ease the housing crisis.
In this way, prices will come down and close to the buying capacity of the underprivileged who are the worst sufferers of the ongoing housing crisis. This will also be looked upon as a welfare move by the government, which in turn may brighten its image greatly.
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