TDS Desk:

The growth in outstanding housing loans in Bangladesh dropped to 7.51 per cent in FY24, down from 12.61 per cent in the previous fiscal year, reflecting a slowdown in credit expansion, according to Bangladesh Bank data.

However, the total volume of housing loans reached Tk 1.283 trillion in FY24, driven largely by Private Commercial Banks (PCBs), which continue to dominate the market.

Private Commercial Banks (PCBs) have maintained a dominant position in the housing loan market, with their outstanding loans reaching Tk 734.2 billion in the FY24 where it was Tk 681.5 billion in FY23.

Thanks to their extensive deposit base and aggressive loan expansion strategy, PCBs remain the key drivers of housing finance in the country.

State-Owned Commercial Banks (SCBs) held the second-largest share, with their housing loan portfolio amounting to Tk 320.7 billion in FY24, whereas it stood at Tk 293.8 billion in FY23.

Meanwhile, other banks collectively accounted for Tk 56.3 billion in outstanding housing loans during the same period.

Specialised housing finance institutions, which focus on long-term deposit collection and mortgage lending, contributed a further Tk 101.1 billion in FY24 to the housing credit portfolio.

The Bangladesh House Building Finance Corporation (BHBFC), the country’s sole state-owned housing finance institution, had outstanding loans totalling Tk 48.0 billion as of June 2024. BHBFC relies primarily on paid-up capital contributed by the government to fund its operations.

The steady growth of housing loans reflects the increasing demand for home ownership in Bangladesh’s urban and semi-urban areas.

However, stakeholders observe that despite the growth, housing credit still represents a relatively small share of total private sector lending, leaving room for expansion in the coming years.

Liakat Ali Bhuiyan, vice president of the Real Estate and Housing Association of Bangladesh (REHAB), said the rise in outstanding housing loans in FY24 compared to FY23 may be attributed to smoother loan disbursements and better accessibility by banks.

“We’ve heard that banks are now offering housing loans more easily, and the disbursement process is efficient — this could be a major reason behind the increase,” he noted.

However, he pointed out a major challenge facing the sector: the 2022 Detailed Area Plan (DAP).

According to Mr Bhuiyan, the DAP has severely impacted the growth of the housing industry and is stalling progress across more than 200 related sectors.

“Landowners have stopped providing land to developers since the DAP gazette was issued, as the plan drastically reduced the permitted building heights,” he said.

Earlier, REHAB called on the government to amend the DAP to revive development momentum and protect the broader housing ecosystem.

“The recent data shows a 7.51 per cent growth in outstanding housing loans in FY24, which is notably slower than the 12.05 per cent growth recorded in FY23. This signals a cautious lending environment and potential structural barriers to housing sector expansion,” said Dr Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

He said, “While the volume of outstanding loans reaching Tk 1.28 trillion reflects growing demand for home ownership, especially in urban centres, the slower pace of growth suggests that there are structural and market constraints impeding greater access to credit that may need policy attention”.

Dr Reaz stressed the importance of regulatory and urban planning reforms. “Policies like the 2022 Detailed Area Plan (DAP) are having an unintended cooling effect on the sector. Revisiting these frameworks could reinvigorate developer confidence and encourage private investments in housing,” he said.

“More strategic, demand-led financing models are required to make housing accessible while sustaining sectoral growth,” he added.