By Yakuta Dawood
Buying or constructing their own house is a dream of any young person growing up. Sri Lankans are no exception. Making this dream come true was a struggle even before the pandemic and the ongoing local economic crisis. With the recent developments, attempts at realising these housing dreams would have been postponed by another decade or more. The Sunday Morning Business this week discusses how difficult it is for a Sri Lankan to afford a house on their own, along with the input of economists.
Advocata Institute Chief Operating Officer Dhananath Fernando stated that housing costs were high due to high-level tariff rates charged with the objective of protecting local industries.
In this background, people could adopt an alternative lifestyle by moving to ‘vertical apartments,’ which also includes certain bottlenecks to overcome.
“If you look at the regulations on apartment buildings, a two-bedroom apartment comes with a space allocated for vehicle parking. This space also costs money, so the price of housing has really gone up because of the parking slot that some may need and others don’t. So such regulatory and non-regulatory issues are increasing the cost of construction. This is a big problem in Sri Lanka,” Fernando explained.
He emphasised that Sri Lankans were reluctant to accept international prices for construction materials such as cement, wall tiles, floor tiles, and electrical goods.
Woes of affording a house
Speaking to The Sunday Morning Business, Gamini Senerath (46), a resident from Ratmalana, stated that he had lived in Qatar for six years to save money with the intention of building his own house in order to avoid the burden of paying rent.
However, Senerath stated that despite having lived in Sri Lanka for over two years now, he had been unsuccessful in purchasing a house regardless of the money saved, due to the increased cost of living.
“All my hard work for six years while staying away from family is completely wasted, because once I returned to Sri Lanka, I used the money to provide for my family’s essential needs instead of building us a home. Today, with everything so expensive, paying rent is another crisis. I don’t know how much longer I can hold my family together with the increased cost of living,” Senerath expressed.
He added that he was actively seeking jobs in Qatar as the income earned there was more than enough to provide his family with all the essential requirements such as food, medicine, education, and other expenses.
Yamini de Silva (53), a single parent raising two children, is another individual who had hopes of living under her own roof, regardless of the size of the property.
She stated that ever since she could remember, she had always worked towards owning a house to provide security for her children, but with the increased cost of houses over time, particularly in areas closer to Colombo, she had been unable to follow through.
“I tried. I tried so much to buy a house or at least a plot of land but I was never able to do it. My job and the children’s education were based in Colombo so it was not easy to leave town. But if I had a single opportunity to go back, I would put some effort into searching for a house outside Colombo. However, due to this one mistake, I’m afraid that my dreams will never come true,” de Silva lamented.
An individual (26) who wished to remain anonymous stated that she was a millennial who was looking forward to settling on her own in Colombo while seeking to be 100% financially independent.
Sharing her present struggles, she highlighted that she was paying rent for an annex shared with a roommate.
“I’m struggling with my finances because I feel that my salary is not a realistic amount anymore in order to save for a property like a house. It has further worsened due to the ongoing crisis. I don’t think I’ll be provided with a bank loan. So the only option left is seeking some assistance from my parents. But I’m not sure whether my parents are in a financial position to assist, given that there are two other children in the family as well,” she added.
Speaking to The Sunday Morning Business, another individual (32) who also wished to remain unidentified, expressed their frustration: “I can’t afford to buy a lunch packet right now, how would it be possible to buy a house with the current crisis in Sri Lanka?”
Several other individuals also shared similar stories of unfortunate situations regarding purchasing a house of their own in Sri Lanka.
Staggering price hikes in 2021
Industry data shared with The Sunday Morning Business by the Lanka Property Web indicates that the overall selling prices of houses in Sri Lanka had undergone a significant increase by 22.53% and apartments by 17.68% in the fourth quarter (Q4) of 2021 when compared to Q4 of 2020.
The House Price Index (HPI) compiled by the Lanka Property Web reveals that the prices of houses and apartments were at their highest since the Index was introduced in 2012.
According to the data, apartment prices had increased by 17.68%, which is an average between Rs. 3 million to Rs. 5 million, while the costs of constructing a house had also risen by 20-30% due to the rising costs of raw material and labour amidst the pandemic.
“From the beginning of 2021, the prices of construction materials such as electric cables, PVC pipes, and steel have continuously increased while a shortage in cement and a price hike of it was witnessed particularly towards the end of 2021. These have discouraged many people from the thought of building their own home and in turn positively impacted the demand for existing apartments that has seen consistent growth over the past months,” Lanka Property Web noted.
Meanwhile, the information shared also revealed that the overall land price values in the Western Province (excluding the Colombo Municipality area) had grown by 74% from 2018 to 2021.
However, the average prices in the Colombo Municipality between areas 1-15 had recorded minor price fluctuations when compared to the rising demand for land in the suburbs. For example, in Colombo 1, 2, 4, and 5, land prices had increased slightly while Colombo 3, 6, 8, 9, 12, 14, and 15 saw reduced land prices when compared with the 2020 average per perch prices.
Accordingly, the average prices of December 2021 in comparison to December 2020 are as follows:
- House price – Rs. 53.90 million. A 22.53% hike in price compared to 2020
- Apartment price – Rs. 47.92 million. A 17.68% hike in price compared to 2020
- Commercial building price – Rs. 262.34 million. A 46.42% hike in price compared to 2020
- Residential land price – Rs. 1.65 million per perch. A -7.30% decrease in price compared to 2020