Macro study on housing finance : demand and supply, problems and solutions

Rapid increase in population, a high rate of urbanization (21%), and inadequate resources for housing development have aggravated the situation. In 1991, the population of Sri Lanka was estimated at 17.2 million persons comprising 3.4 million households. Occupied housing stock totalled 3.1 million units, suggesting 9.7% overcrowding. This study reviews recent trends in the housing sector using demand and supply analysis. The analysis considers (1) the estimation of housing investment as a percentage of the Gross Domestic Product (1988-1991); (2) public sector expenditure on housing as a percentage of total Government Expenditure; (3) housing sector investment by the public and private sectors; and (4) estimation of public and private sector recovery rates of housing loans. The report is divided into five sections. The first discusses the dimension of the housing problem, taking certain housing indicators of Sri Lanka and other developing countries into consideration. The second reviews the historical development of housing construction in Sri Lanka by examining major public sector programs. The third analyzes the demand for housing in the current economic environment using a multiple regression model. A forecast has been done for a ten-year period on the number of new units required as well as upgrading and replacement needs. The last two sections examine housing supply and related problems. (Author abstract)