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Lack of housing loans gives rise to cheaper house construction
Khandu Tobgyel, August 02, 2013
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The most visible result of Rupee crisis and subsequent stopping of housing loans is the rise of low and humble housing. The period of high and extravagant building has halted.

In the towns across the country today, construction of low cost and humble dwellings is on the rise. People say that such low cost homes save economic burden on themselves and the nation.

Tandin Gyeltshen, 41, from Kawang in Thimphu, said he could not avail himself of loan from the banks to construct his house. But there was Bhutan Development Bank Limited (BDBL), the only financial institution with rural mandate, which was still giving out loans. He wasted no time to secure a bit. His house today is one unique sample. Half of it is concrete, half a humble wood and mud structure. But it is attractive, and his neighbours are already planning to build a house like his.

“I would have had to spend a lot more otherwise,” says Tandin, “with materials from across the border and transportation cost.” Construction of his parents’ house the modern way with concrete and steel cost more than double. “For the additional storey, I spent only Nu 15,000, labour charge included.”

Today he is paying Nu 11,400 interest on the loan every month to BDBL for the Nu 500,000 loan that he took. “I found out that constructing a house with wood and local materials is by far cheaper. And the durability is better,” said Tandin.

Toep gup DorjiNorbu said that people suffered not much problem due to stopping of loans by the financial institutions. With BDBL still giving out loans to farmers, people are resorting to cheaper homes.

Phub Om, 56, from Jangsa in Punakha said that due to lack of housing loan she could not build a house she had planned to build. She is living in a temporary hut with her family of six.

“I think lack of loan is an opportunity. We can build houses the traditional way and reinforce our tradition and culture,” said Phun Om.

Lack of loan seems to have generated some employment opportunities too. Fifty-year-old Tashi Dorji, a carpenter, said he had gone out of work for a long time. “Construction of modern buildings did not require traditional builders. And a bunch of us went jobless. Now we are back again,” said Tashi. “I think this is good for both home owners and builders.”

Penjola, a resident of Kabesa in Thimphu, said that he is planning to build a house in the traditional way which is by far cheaper and stronger compared with modern buildings. “Stopping loan I think was a good idea in the hindsight.”

Beginning in the latter part of the 1990s, Bhutan saw rapid economic development. With it came rapid infrastructural growth – roads, housing, and hydropower, among others. The precious little arable land got gobbled up.

The most visible growth was the housing boom. Towns began to erupt on the once lush and green rice fields of Paro, Wangdue, Punakha and Thimphu, to name a few districts.

That was the beginning of a spectral dream that informed the country that self-sufficiency in food is of paramount importance that Bhutan must pursue to safeguard its sovereignty. But the little cultivable land, which is less than eight percent, continued to be spawn buildings.

But, housing boom lasted only as long as economy could sustain. Then came a sort of bust.

After the burst, period since the later part of 2009, real estate growth began to hit the cul-de-sac. That was when Bhutan was importing more than it could export and balance of payment subsequently became negative. Hence the Rupee shortage and the economic repercussions that the country is yet to address.

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