Rapid rise of house rents pinches city dwellers

City Desk:

Dhaka, the fourth largest city in the world with a population of over 24 million people, faces a growing and significant challenge. The densely populated megacity in Bangladesh sees its population expand on a daily basis with people frequently migrating to Dhaka.

The main driving forces behind migration to the city are poverty, job search, and societal pressure, says UNB.

According to the Population and Housing Census 2011, over 12 million people lived in the Dhaka division. But the Population and Housing Census 2022 reported that nowadays 44 million people live in the Dhaka division. So, the population growth rate at 1.74per cent in the division now stands. Between 1991 and 2001, population growth was 4.15 per cent and 7 per cent, respectively.

The tenant-landlord burden
The rental housing market in Dhaka is defined by a severe power imbalance between landlords and tenants, but the crisis runs deeper than a simple lack of regulation. It is fuelled by a vicious cycle where rampant land speculation directly translates into an unbearable burden for the city’s millions of renters.

Increasing migration to cities and high population growth have resulted in a rapid decline of affordable urban land, causing house prices to exceed the reach of middle- and low-income households. This is not just due to a housing shortage but because land itself has been transformed into a high-yield financial asset. Land prices in Dhaka, for example, increased by an unprecedented 2,700per cent between 2000 and 2021, turning property into a speculative commodity rather than basic shelter.

In recent years, the cost of housing in Dhaka has been rising for clear financial reasons. With gains from land speculation far exceeding returns from traditional financial systems, a flood of capital including a huge portion of the nation’s ‘black money’ and a significant amount of foreign remittance, pours into the real estate market, driving prices ever higher. Consequently, house rent has been rising dramatically.

The economic cost of high rent
When high rents absorb a significant portion of the household income, leaving less available for consumption, investment or other expenses, it reduces the overall multiplier effect of the money circulating through the economy.