University of Bahrain

Done by: Hawra sayed maitham Serial number:10 Section:5 Eman Serial number: Section:

Over the past years Bahrain has witnessed a tremendous growth economic activity accompanied by a fast population increase which resulted in a dramatic increase in housing prices . this increase in prices lead to a shortage in affordable housing. Despite its booming economy and healthy GDP, Bahrain suffers
from an acute housing shortage estimated at approximately 53,000 homes of the population. Affordable housing is housing which, including amenities, can be paid for using less than 30% of an individuals salary !hilst the "D# and national balance of $ahrain remain high, the median monthly salary remains far below what can cover mar%et prices part from the obvious denial of peoples basic right to decent shelter, this shortage threatens to ta%e away essential wor%ers such as teachers, nurses, doctors, police, social wor%ers, support wor%ers, middle managers and cleaners from central areas of population and commerce, and threatening to disturb the social and economic balance of $ahrain

Definition of affordable housing:

Affordable housing is a term used to describe dwelling units whose total housing costs are deemed affordable to those that ha!e a median income. "lthough the term is often applied to rental housing that is within the financial means of those in the lower income ranges of a geographical area, the concept is applicable to both renters and purchasers in all income ranges. #his article focuses on the affordability of owner$occupied and pri!ate rental housing as social housing is a specialised tenure. %n the &nited 'tates and (anada, a commonly accepted guideline for housing affordability is a housing cost that does not exceed 30) of a household*s gross income. +ousing costs considered in this guideline generally include taxes and insurance for owners, and usually include utility costs. ,hen the monthly carrying costs of a home exceed 30-35) of household income, then the housing is considered unaffordable for that household.

the problem of high housing prices which lead to a mistmatch between supply and demand arises as a result of the following :

1-Dramatic increase in population. 2- inflation 3- low level of income

- usage of lands and beaches in investment pro!ects "- high mortgage rates.

1-

Dramatic growth in population:

"lthough Bahrain is the smallest "rab economy its population crossed . million for the first time, reaching ..3/ million in 000/ from 120,53. in the year of 0003. "nd the estimated growth rate for 00.0 e4uals to ..023), moreo!er the estimated birth rate for 00.0 e4ual to .3.5. births6.,000 population. "ccording to &7 figures, it is estimated that the population will double by 00.1 because of the high fertility rate. +ere is a graph shows the increase in the population for the last .0 years8

"ccording to these numbers abo!e, we can tell the there is a big growth in the population in Bahrain, and this growth is one of the important reason for the go!ernment9s inability to :eep up with demand for housing.

2- inflation: The US Central Intelligence Agency (CIA) reports that in 2009 Bahrain's gross domestic product ( !") #ere estimated a $28 billion$ The per capita !" #as estimated at $38,400$ The a%erage in&lation rate in 200' () and on 2009 *)$ housing costs rose ($*+ per cent, and &ood, -e%erage and to-acco costs 9$* per cent, the data sho#ed$ In&lation in Bahrain #as 2$0. per cent in 200/, according to central -an0 data$ The go%ernment has set aside +0 million dinars (120/$+ million) to help its citi3ens cope #ith a rise in the price o& -asic goods$

4igh in&lation lead to high construction costs #hich made it impossi-le &or de%elopers to meet the demand &or a&&orda-le housing$ 3- low level of income:
!hilst the "D# and national balance of $ahrain remain high, the median monthly salary remains far below what can cover mar%et prices #he latest figures from the General ;rgani<ation for 'ocial %nsurance =Gosi>, which record the le!el of salaries recei!able by insured wor:ers show that /0 per cent of non$ Bahrainis and 30 per cent of Bahrainis earn under BD200 =?.,03.> per month. #his constitutes 53 per cent of the total insured wor:force. apart from the obvious denial of peoples basic right to decent shelter, this problem threatens to ta%e away essential wor%ers such as teachers, nurses, doctors, police, social wor%ers, support wor%ers, middle managers and cleaners from central areas of population and commerce, and threatening to disturb the social and economic balance of $ahrain &oreover , developers in $ahrain have focused

on the mid to high income buyer demographic targeting the wider G(( mar:et which lead to a lac: of supply of low$cost housing.

The report said5 6It is e7tremely disconcerting to disco%er that .*,000 households &all into this category #hen the total num-er o& Bahrainis in employment is only around 2*',000$8 The rate o& gro#th in the #aiting list e7ceeds the rate at #hich the o%ernment can address the pro-lem and the situation loo0s set to #orsen in the short term$ The report states this pro-lem apparently lies #ith the land$ !ue to the rampant land trading that has ta0en place in Bahrain in the last

&e# years9 prices o& land earmar0ed &or lo# density residential de%elopment ha%e risen sharply and in most areas can -e &ound in a range -roadly around the B!20:&t; le%el$ Based on a small plot o& 22. s<uare meters, the cost o& the land alone #ould -e around B!.0, 000 (US!1 2*2,000)$ The su-sidi3ed mortgage &or mid to lo#=income Bahrainis o&&ered -y the o%ernment only amounts to B!+0, 000 (US!1 20/,000) >not e%en enough to -uy the small plot o& land on #hich a Bahraini household #ould #ant to -uild their house$ - usage of lands and beaches in investment pro!ect: In recent years , most o& Bahrain -eaches ha%e -een turned into in%estment pro?ects$ !espite the &act that the #or0 and housing ministry o& Bahrain o#ned lands #orth .00milions B! in Bander Al See& , they ne%er had any housing plans there$ @oreo%er , #hile the go%ernment o& Bahrain has -een encouraging in%estments to pro%e the #orld that Bahrain is de%eloped Bahrain ha%e no place to stay$ In &act @"s pointed out that in the ne7t ten years time Bahrainis #ould -e una-le to o#n a plot o& land in Bahrain$

5$ high mortgage rate8 #he a!erage mortgage rate in Bahrain is around 5.5) = the same rate paid on personal loans > which is considered high compared with international mar:ets . one reason for this is that ban:s ha!e difficulty on reposition of the collateral = house or land>. @oreo!er , the subsidi<ed mortgage for mid to low$ income Bahrainis offered by the go!ernment only amount to BD20,000 while a small plot of 005sua4re meters of land cost around 50,000.