By The Sri Lankan dream of homeownership is turning into a nightmare for many, thanks to an intricate web of inflated building material costs, powerful oligopolies, and misguided government policies.
At the heart of the problem is import restrictions and market dominance. The government’s protectionist measures have shielded domestic manufacturers of tiles, aluminium, steel, and cement from foreign competition, allowing them to operate as profit-hungry oligopolies with little incentive to compete on quality or price. This lack of market pressure has translated into exorbitant costs for builders, ultimately squeezing out low- and middle-income households from the housing market. Owning even a modest 500-square-foot house demands a top 70th percentile income, while a 1,000 sq ft dream becomes attainable only for the elite few in the top 75th percentile.
Intertwined ownership among tile manufacturers grants them control over the entire value chain, from raw materials to packaging, leading to further price manipulation. The Consumer Affairs Authority, supposed to be the champion of consumer rights, seems either powerless or unwilling to tackle these anti-competitive practices, adding fuel to the fire.
Consumers are forced to endure the double whammy of high prices and limited choices. Access to essential building materials becomes a gamble, with long waiting times and erratic supplies adding to the frustration. Innovation suffocates under the monopoly’s shadow, further hindering industry growth and improvement. Ultimately, the Sri Lankan dream of homeownership becomes a cruel mirage, shimmering just out of reach for the vast majority.
Housing Nightmare:
To break free from this housing nightmare, the path is clear but not easy. The first step lies in tearing down the walls of protectionism. Removing import restrictions and opening up the market to healthy foreign competition would inject much-needed pressure on domestic manufacturers. This, in turn, would force them to lower prices, improve quality, and innovate to retain their market share.
Next, dismantling the grip of oligopolies becomes crucial. Encouraging market diversification, breaking up interlocking ownership structures, and fostering a more competitive environment are essential steps. An empowered Consumer Affairs Authority, equipped with resources and independence, must then actively monitor and address anti-competitive practices, safeguarding the rights of consumers.
Finally, addressing the macroeconomic issues contributing to the crisis is critical. Sound monetary policies that control inflation and prevent currency depreciation would minimize the need for protectionist measures, further paving the way for a stable and competitive market.
Sri Lanka’s housing crisis demands immediate and focused action. By embracing open markets, promoting fair competition, and empowering consumer protection, the country can build a path towards affordable and accessible housing for all. Only then can the Sri Lankan dream truly take root and flourish, offering families a secure and affordable haven to call home.
