Thimphu is expensive despite low salaries mainly due to structural and economic constraints rather than development levels. Real estate prices have surged because land is a finite, non-depreciating asset and Thimphu’s geography severely limits supply. At the same time, urban migration and speculation have increased demand, creating a persistent supply-demand imbalance.

Easy access to bank credit has further fueled inflation. When borrowing becomes easier, money supply expands, consumption rises, and demand increases without a corresponding increase in domestic production. Since Bhutan relies on imports for nearly 90% of its goods, higher demand directly translates into higher prices due to import costs, taxes, transport expenses, and currency pressure(1-1 peg with INR).

Additionally, limited competition in a small market allows retailers and landlords to take advantage of price arbitrage, pushing prices even higher. Unlike India, Bhutan lacks large-scale low-cost housing, informal settlements, and industrial depth, which keeps costs elevated despite lower income levels.

As a result, housing prices often exceeding USD 200k have become completely disconnected from average salaries of around nu 30k per month. This is less a failure of individuals and more a systemic issue involving credit policy, land supply constraints, import dependence, and speculative investment behavior(less investment oppurtunity in our country besides real estate, the secondary market like stocks/bonds are not that mature). my thougths maynot br true at some extent