Urbanization And Home Ownership In Bangladesh Economics Essay
Disclaimer: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers. You can view samples of our professional work here.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.
Bangladesh is a developing country and has a population of 160 million. Urbanization process has increased rapidly. In 1891 only 2 percent citizens lived in the cities, and in 1961 this number increased to 5 percent. Baxter (1997, p) shows that city's population was 9 percent in 1974, that increased to 10.6 percent in 1984 and 17 percent in 1992.
In Bangladesh education, employment, healthcare and other social aspects are centralized in the cities, especially in Dhaka. As a result Dhaka is facing a huge rate of rural urban migration. Takehiko Nomura (1996, p12) provided that
"Emerging urbanization and the population explosion will bring more social troubles to the world: poverty, environmental degradation, and shortage of housing, food and water- factors capable of creating instability around the world."
According to New Internationalist magazine (issue 386,p 18) amongst the population of the top sixteen cities, a big proportion live in slums, between 40 percent and 50 percent in Jakarta (Indonesia), and a third in mega- metropolises like Dhaka ( Bangladesh), Kolkata (India) and Sao Paulo ( Brazil).
In developing countries government intervention is very little about housing issues. Low and middle income group especially who are not in the public services go for self-help housing construction, or live as tenant. But now a day there is a lot of obstacle to find a plot of land. Datta and Jones (1999) provide evidence that people purchase via family and friends. Sometimes they apply for a plot in a government or self-help housing association project.
In Chandigarh (India) there are two types of housing, one is public or semi-public housing which is provided by government or semi- government organization for their employees and the other is private housing that is occupied by the owners themselves or rented to tenants, (Sandhu 1985).
There is evidence that (Ray Forest 2002, p2) urbanization rate is higher in East and South East Asia. It comes along with economical and social changes. This growth rate is putting pressure in the real estate market. As a result prices have gone up by 20 percent.
Augus, Doling and Lee (2002, p 179) have provided evidence that households in Asia have lower standard than that in western countries. Construction industries in Asia could not add sufficient new housing of a standard level with those economic levels.
In Hong Kong it is a common feature that people are living in an apartment of less than five hundred square feet. They cannot afford larger floor space.
It is stated that (James Lee, Ray Forest, and wai Keung Tam 2002, p20) individual home-ownership is a new trend in East Asia. Only exception is Singapore, where government supported home-ownership ideas through its efforts in 1960s. It is further mentioned government of Taiwan and South Korea gives housing provision the secondary importance to the central goal of economic development.
The Japan Housing Corporation is trying to develop large scale housing sites to construct housing for middle class workers in the cities. In Japan housing investment reached 12990 billion yen in 1978. 94 percent of it came from private sector investment. Housing sector is dominated by home-ownership and private renting. Government gives subsidy for low-cost public rental housing to the low-income families.
Evidence shows that (James Lee, Ray Forest and Wai Keung Tam, 2002, p 38) National Housing Authority does not play an important role concerning housing issues in Thailand. Rich families build their own houses, whereas middle income group depend on private sector. But Housing Bank provides loans for both developers and individual purchases.
Housing is a fundamental concern in human life. Byrne and Diamond (2007, p527) concluded that
"Housing provides a necessary foundation for physical and social life. It provides shelter, security, recreation, and wealth. It plays a central role in the health and well-being of its occupants and also supports their employment and educational endeavours. Among the poor there is a severe shortage of adequate, affordable housing."
Housing costs in relation to household's income and the quality are the issues that come to centre- stage in policy debates, (Marsh and Mullins 1998, p1-2). Government around the world is facing a fundamental debate about their role to the group who find it difficult to secure adequate accommodation for them. This issue varies between societies.
Demographic and social changes influence the housing market. The demand for housing varies with the size of the families, and the age and other characteristics of the population. Generally large families need more spaces. If they decide to spend less on housing but still want more space, they have to compromise with quality. Economic change determines the type and quantity of housing. It also determines consumers' ability. Technical and organizational changes in the housing sector can affect the cost. Housing finance institutes also play a very important role and their change affect housing sector as well.
Price of building materials, availability of land, labour cost influences the market function.
Changes in the government policy directly influence housing market. They can make it easy for low or middle income group by providing subsidies or creating special fund from where people can get secured loan. Marsh and Mullins (1998, p5) provided that
"A prime example in Britain is the personal subsidies paid to low-income tenants through the housing benefit system: throughout the 1980s housing benefit was seen as the main component of government policy towards housing and yet the housing benefit system is the responsibility of the Department of Social Security."
In Britain central government rely upon local authorities about housing. Housing associations help implementing policies which is formed centrally.
Meyerson and Terrett (1962,p70) gives evidence that in U.S.A. government provides better homes to low- income families through public housing. In order to do that The Housing Act of 1949 extended its aid for low rent housing program.
Government can monitor private sector's activity concerning the quality issues. Besides through its fiscal and regulatory policy it can influence them. It can try to influence the amount of property of particular types that is produced and consumed. Sometimes it can negotiate pricing policy as well.
Country's economy always plays a vital role. And changes in this sector create a strong impact in citizen's life. If unemployment grows people may not afford individual and independent households.
Housing expenditures varies in different countries. Meyerson and Terrett (1962, p60) have provided that in developed countries the first and largest item in every family's budget is food and beverages. But in the developing countries the largest expenditures for the families is housing. It is further mentioned housing expenditures vary with occupation and education within each income class.
Affordable housing refers to low-cost homes to either rent or buy, (Ratcliffe and Stubbs 1996, p482). It can be considered for the people in low or middle income group. Normally it is related to large- scale housing project. In the developed countries it is often seen as new settlements and urban villages. They are meant to be low- cost housing.
Ratcliffe and Stubbs (1996, p486-491) further mentioned that a new settlement is a private sector sponsored new town where 2000 to 10,000 people can live. An urban village is a mixed-use mixed-ownership urban development based on public- private sector co-operation. It covers about two hundred acres. It not only provides housing but also provides small businesses, shops. It develops community feelings among people.
In multi- family buildings people maintain personal relationships to manage the property well. This practise can be reflected in the national level, (Byrne and Diamond 2007).
Consumers attitude towards housing aspects need to be considered to understand the housing market function. It has evidence that (Meyerson and Terrett 1962, p86) customer thinks about the number of the rooms, not about the floor spaces. They will prefer a three room house rather than a two room house of greater dimensions. Customers also put their attention on improvements in equipment and layout. They want information about its relative value, and its conformity to codes and ordinances. They consider the characteristics of their possible neighbourhood.
Some people want to live far from the madding crowd. But they like to earn their living by working in the metropolitan labour market. They think improvement in the transport system can make it possible for them.
Home building is supported by a group of people and institute, such as building materials suppliers, contractors, subcontractors, architect, labour and lending institutions. Meyerson and Terrett (1962, p106) describes a large-scale builder activities that
"Since he produces groups of houses from similar or identical plants at one location during a single undertaking, he is in a position to obtain important economies in the purchase of land, the mass construction of structures, the purchase of supplies, and the scheduling of labour and equipment."
The case of Dhaka:
It provides evidence that (Islam, 2004) home ownership rate is very low in Dhaka. It can be compared with some Indian cities, such as Delhi or Bombay.
Rents are very high in Dhaka. Dhaka City Corporation (DCC) has fixed rent in different zones, but it is not followed properly.
Bangladesh has the National Housing Policy which was formed in 1993. It was amended in 1999 and in 2004. Government does not directly involve itself in the housing sector. Baker (2007) provides that government acts as 'facilitator' or 'enabler' and trying to increase the access to land and housing. It is trying to modify infrastructure both for the individual and the private sector. Through Bangladesh Bank (BB) it is trying to promote housing finance institutions.
Islam (2004) shows that out of one million units in Dhaka metropolitan areas private sector housing companies delivered 48 thousands housing units, public sector contributed 100,000 units and co-operative sector delivered only two thousand units.
Baker (2007) has provided that main consumers of private sector housing are upper and middle income groups. He further added their minimum income should be fifteen thousand (Bangladeshi Taka) per month.
Land prices are very high in Dhaka. It is considered to be the main obstacle both for self-help housing construction and private sector housing companies. Baker (2007) provides evidence that it can be compared with the suburban of New York. Dhanmondi is the most expensive area where the price stands at 3500 taka per square foot, (around$60). In Gulshan land price stands at 3194 taka per square foot, and in Baridhara at 3000 taka per square foot. Land in the less expensive area (such as Pallabi, Shamoli) is around 1600 taka per square foot. It is notable that there is a real scarcity of developable land in Dhaka city.
Public land occupies some colony for public service holder, military cantonment and other government related institutions. But it is accepted that the use of public land is badly managed and need to be addressed to make the maximum use.
Cite This Essay
To export a reference to this article please select a referencing stye below: