Housing demand and housing policy in urban Bangladesh

This paper estimates demand for housing and its attributes in urban Bangladesh using a survey of 4400 owner, renter and squatter households. The results revealed that housing demand is inelastic with respect to income and price; and price elasticity is less than income elasticity in absolute terms. Estimates of demand for housing attributes showed that owner and renter households value structural quality, sanitation and electricity, as well as a living room and dining room/kitchen. Squatter households value living space, pit latrine, water supply and electricity, but place less emphasis on structural quality. Irrespective of these submarkets, income improvement strategies are likely to be the most effective means of enhancing housing consumption. The rental submarket might be improved by rent liberalisation, while slum improvement strategies should focus on tenure security and incremental improvement. However, contrary to current practice, the emphasis should be on the size of squatter dwellings rather than on their structural quality.