Rising Loan Costs Slow Bangladesh’s Mid-Range Housing Market

Bangladesh’s mid-range real estate market has experienced a major slowdown in 2025 as higher home loan interest rates continue to reduce affordability for middle-income buyers. Many salaried individuals who once relied on bank financing to purchase apartments are now struggling with increased monthly instalments, causing a sharp decline in property sales.

The situation has been further affected by economic uncertainty, inflation, and political instability, all of which have weakened buyer confidence across the housing sector.

According to data from Bangladesh Bank, housing loan interest rates increased significantly over the past few years. Rates that were previously below 10 percent rose to nearly 17 percent by early 2024 and remained high into 2026. As a result, many potential homeowners have delayed or cancelled purchase plans.

Industry experts say the mid-income segment has been impacted the most because buyers in this category generally depend heavily on bank loans. In many cases, customers finance around 70 percent of an apartment’s value through mortgages while paying the rest as a down payment. When interest rates were lower, monthly instalments were comparable to rental costs, making home ownership more practical. However, the recent rise in borrowing costs has changed that equation entirely.

Developers across the country are reporting a noticeable drop in sales. Several companies have seen sales decline by 20 to 30 percent compared to previous years. Rising financing expenses have also discouraged investors, who now view property investments as less attractive during uncertain economic conditions.

At the same time, developers are facing increased construction expenses due to higher prices of raw materials and operational costs. While costs continue to rise, apartment prices in some areas have either remained stagnant or declined, creating pressure on profit margins for real estate companies.

Another challenge affecting the sector is the slowdown in project approvals and policy changes related to urban planning regulations. Delays connected to the Detailed Area Plan (DAP) revisions and approval procedures from Rajdhani Unnayan Kartripakkha have disrupted the launch of new projects and increased uncertainty among developers.

Luxury housing markets in premium locations such as Gulshan, Banani, and Dhanmondi have also experienced significant declines in sales activity. Industry insiders report that many wealthy buyers are now investing overseas instead of purchasing high-value apartments locally.

Despite the ongoing challenges, real estate professionals remain cautiously optimistic about gradual market recovery in the coming months. They believe improved political stability, easing regulations, and more affordable financing options could help restore confidence among buyers and investors in Bangladesh’s housing sector.

Source: The Daily Star