Did you know that Bangladesh is one of the most densely populated places in the world? That provides several complexities that the government must tackle head on. With so many people clamoring for a limited supply of apartments, the decision to rent or buy is ever more important.
Most families are looking to buy
Despite popular belief that most people are looking to rent, over 60 percent in reality are seeking to buy. This is understandable, given the rent increases that have spiraled out of control in the past decade, in some areas up to 10 percent.
So what is the decision process?
With so many people hoping to get their own place, what is holding them back? Well there are a few difficulties. The first is access to capital. And while getting a mortgage is becoming easier and easier, there are still some difficulties. Loans of up to BDT 1 million are accessible, but in most cases a 20 percent deposit is required. HSBC offer the lowest interest rates at 11.5%, compared to the 18.5% charge with HSBC.
But should I really be buying?
With the prices of apartments and houses on the rise, it’s clear that the investment makes sense. Some speak of property bubbles but with a fast growing population and an emerging middle class, analysts predict no end in sight to the heated real estate market.
Calculate the hidden costs
Naturally, it is important to factor in the total cost of buying, such as agent fees, legal fees, stamp duty, and local taxes. All of which can end up being very expensive. Most people in Bangladesh are now paying way in excess of the recommended one third of their income on rent. With a mortgage or home loan this could be brought down to a more reasonable proportion of your monthly salary.