In Search of Housing Bubble in Bangladesh

Housing bubble, in the recent past, has shattered the US economy and rendered the global economies vulnerable. Though the tremor of the subsequent global recession did not strike the housing market in Bangladesh so vehemently, Bangladesh Bank in 2011 cautioned of the existence of a bubble in the country’s housing sector and an ensuing painful crash thereof. The fear is still not over as the supposed bubble did not burst yet. The present paper is meant to probe into the housing market of Bangladesh regarding the existence of bubbles. The paper tests hypotheses using the t-distribution at various significance levels. The data collected from a small sample (below 30) of housing companies in Dhaka city and finds that the price of housing grew significantly more relative to other products in the area. The study confines itself within the housing for the middle class; upper or lower class homes are out of its realm. It is anticipated that the findings will be functional to understand concerning the existence of housing bubble in the financial market of Bangladesh.