Asset bubble in making amid pervasive apathy
Tuesday, 2 March 2010
Sheikh Shahariar Zaman
Sharp rise in prices of assets is continuing in the country amid virtually no resistance from any collective front - be it social or political.
The government usually swings into action against price hike, but no preventive act or even strong rhetoric is visible in the case of real estate price sky-rocketing, market analysts said recently.
"It is not a good sign that the price of real estate properties is increasing sharply," former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed said.
The housing companies or developers are charging abnormal price for a piece of land or apartments, he said.
According to market experts, the land price went up by more than 50 per cent in the city's posh areas in one year. The apartment price increased by 35 to 40 per cent in the same period.
Dr. Salehuddin attributed the price hike to too much liquid money in the hands of a few people and scarcity of land.
"The syndrome is against equitable growth as the labour class gets only negligible money from the sector," he said.
The government should find out an alternative housing scheme and the central bank should take a cautious approach towards lending to the sector, he added.
The recent monetary policy says: "Activities of developers in residential and commercial building construction have spread into other urban centres and tourist sites besides the capital city, with the growing workers' remittance inflows strongly fuelling demand and creating bubble-like price pressure in the real estate market."
Policy and Research Institute executive director Ahsan Mansur has said when the bubble of asset price will burst, it will create a huge negative impact on society.
Remittance and capital gain from the stock market also has contributed to the asset price hike, he said.
"The money is not going to the productive sector prompting a concern for the policy makers," he added.
Meanwhile, Real Estate and Housing Association of Bangladesh (REHAB) organised two fairs in Dhaka and Chittagong in the last two months and fetched spot orders of about Tk 17 billion.
These realtors upon facing land shortage in the city are moving beyond the capital, as the target middle-class buyers are looking for their choice abodes outside the big city bustle.
In Dhaka, areas like Uttara and Mohammadpur are becoming a popular destination for the middle class people, market experts said.
According to insiders, in the real estate sector the upward trend in prices is likely to continue in line with the increasing demand for land and housing in the capital.
They said the proposed construction of four satellite towns could partly solve the ongoing housing crisis in the capital, and could deflate the real estate price boom.
Sharp rise in prices of assets is continuing in the country amid virtually no resistance from any collective front - be it social or political.
The government usually swings into action against price hike, but no preventive act or even strong rhetoric is visible in the case of real estate price sky-rocketing, market analysts said recently.
"It is not a good sign that the price of real estate properties is increasing sharply," former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed said.
The housing companies or developers are charging abnormal price for a piece of land or apartments, he said.
According to market experts, the land price went up by more than 50 per cent in the city's posh areas in one year. The apartment price increased by 35 to 40 per cent in the same period.
Dr. Salehuddin attributed the price hike to too much liquid money in the hands of a few people and scarcity of land.
"The syndrome is against equitable growth as the labour class gets only negligible money from the sector," he said.
The government should find out an alternative housing scheme and the central bank should take a cautious approach towards lending to the sector, he added.
The recent monetary policy says: "Activities of developers in residential and commercial building construction have spread into other urban centres and tourist sites besides the capital city, with the growing workers' remittance inflows strongly fuelling demand and creating bubble-like price pressure in the real estate market."
Policy and Research Institute executive director Ahsan Mansur has said when the bubble of asset price will burst, it will create a huge negative impact on society.
Remittance and capital gain from the stock market also has contributed to the asset price hike, he said.
"The money is not going to the productive sector prompting a concern for the policy makers," he added.
Meanwhile, Real Estate and Housing Association of Bangladesh (REHAB) organised two fairs in Dhaka and Chittagong in the last two months and fetched spot orders of about Tk 17 billion.
These realtors upon facing land shortage in the city are moving beyond the capital, as the target middle-class buyers are looking for their choice abodes outside the big city bustle.
In Dhaka, areas like Uttara and Mohammadpur are becoming a popular destination for the middle class people, market experts said.
According to insiders, in the real estate sector the upward trend in prices is likely to continue in line with the increasing demand for land and housing in the capital.
They said the proposed construction of four satellite towns could partly solve the ongoing housing crisis in the capital, and could deflate the real estate price boom.