Global Housing Trends, Focus on South Asia

Regional Overview; In terms of economic growth, the South Asia region continues to be the second fastest growing region in the world after East Asia. The region, encompassing Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka has recorded an average annual growth rate of over 5% in 2003. Despite the fact that most of these countries have a strong agrarian economy, the thrust in GDP growth in the recent period has emanated from the services sector, accounting for 40% to as high as 60% of GDP. Ironically, the South Asia region continues to remain one of the poorest regions in the world. Forty-five per cent of the region’s population lives below the international poverty line of USD 1 a day. This region, most notable for its large population is also home to about 40% of the world's poor.
Urban Demographics; South Asia is in a period of transition as it strives to implement effective economic, political, social and legal structures to support sustained growth. The challenges are particularly great because of the speed at which their populations are growing. During the last fifty years, India's total population more than doubled, while the urban population grew by more than five times. In 1996, the urban population in Bangladesh was 23 million. By 2020, it will increase to 58 million. The urban population in Nepal, during the same period, will grow from 2.6 million to 7.7 million, and in Sri Lanka it will double to more than 8 million.

Structure of the Mortgage Market From a regional perspective, the mortgage markets in South Asia are small and fragmented with the unorganised sector continuing to play a dominant role, especially at the lower income strata. Further, key data that reflects the performance of housing markets such as housing starts, sales volumes, movement of house prices, size of the mortgage market and defaults on mortgage loans are insufficient, incomplete and not updated regularly. As regards the organised segment, there are distinct commonalities that characterise some of the mortgage markets of South Asia – a heavily subsidised monolith-like state run institution, a fledgling private sector catering to the middle and upper income segments and players from the banking sector who provide housing finance as a part of their retail portfolio. The mortgage markets in Sri Lanka, Bangladesh and Pakistan are such archetypes. A brief overview of the structure of these mortgage markets are given below. The Indian mortgage market, the largest and most developed in South Asia has seen turnaround that merits separate treatment as a case in point.