Towards Housing Affordability

With continued migration Thimphu sees an acute crunch of affordable housing mostly in the form of steep rents or mortgage repayment, primarily resulting from high construction cost, high land value and high interest in housing finance (World Bank 2020). Despite not having quantitative housing gap, the middle- and low-income Thimphu residents are torn with exorbitant house related expenditure, with households paying mostly more than 30% of their income on housing in urban centers and beyond, thus reflecting an affordability gap (MoWHS 2019). The formal housing provision in Bhutan has been dominated by private sector. In Thimphu 75% of the housing stock is provided by the private developers. Therefore, private developers are one of the most important supply side actors and more crucial in the case of Thimphu. Considering the importance of private developers in housing provision, the research tries to understand and explain the influence of supply-side constraints on affordable housing delivery by private developers in Thimphu. The research takes an explanatory and qualitative route to establish its aim through research questions which include the concepts of housing value chain of supply-side, supply-side constraints, affordable housing delivery, and developer’s perception. Data was collected through semi structured interviews with 8 private developers and 2 government officials from Ministry of Works and Human Settlements and Thimphu thromde. Along with the primary data, secondary data was also collected and presented to triangulate the information collected from private developers. The analysis of the findings indicates that the housing value of chain supply-side is weakened by land acquisition and house construction. The weaklinks of the value chain are further moderated by supplyside constraints especially the landuse and zoning regulations and building codes. Further, the physical constraints also influence the land acquisition step while at the same time influencing the landuse and zoning regulations. It was also revealed that the construction practice culture and educational background of developers had an influence on the cost of housing. While carrying out the research, it was also learnt that the data and literature on housing for Thimphu is really poor. Thus, the research sets a starting point towards exploring important topics for housing in Thimphu including the construction practice culture on housing affordability, building codes influence on housing affordability, and detailed study of housing value chain itself. The study also recommends formalization of private developers and initiating the housing data system to understand the housing needs and trends.