‘Pakistan confronts with challenge of housing backlog of 9m units’

KARACHI: Pakistan is currently confronting with a massive challenge of housing backlog of around nine million units, of which, a large part pertains to the economically disadvantaged families and members of the lower middle class, said Prime Minister Nawaz Sharif in a message read at a conference on Thursday.
“A weak governance regime of urban civic institutions has resulted in the mushroom growth of katchi abadies and slums and squatter settlements in major metropolitan areas,” the primer said.
“The government has announced a comprehensive housing finance scheme, which includes construction of 1,000 clusters of 500 houses each for low-income families across the country,” Sharif said at a two-day international conference on affordable housing and mortgage finance held in Islamabad.
“To ensure cost-effective access to credit for housing, the government has undertaken to pick up a portion of the cost of financing on behalf of the borrower over and above eight percent under this programme,” the prime minister said.
Speaking on the occasion, Minister for Housing and Works Akram Khan Durrani proposed the government to enhance the house rent allowance for government employees up to 65 percent in the forthcoming federal budget 2015/16.
Addressing a two-day international conference on “Affordable housing and mortgage finance”, he said the government had increased the house hiring allowance by 35 percent last year to provide decent living to the low-income government employees.
The conference was organised by the State Bank of Pakistan (SBP) with an aim to improve housing finance in the country and share the knowledge and international best practices of financial sectors developers and academia for the provision of low-cost housing facilities for the lower income people in the country.
Reaffirming the government’s commitment to provide housing facilities for lower and middle income people in the country, the minister said that the government would provide housing facilities for 500,000 underprivileged people in the country by 2018.
Besides, he said all the arrangements have been finalised for launching the Prime Minister’s Apna Ghar Scheme for lower income group families across the country, adding that the land for the scheme had also been acquired.
There was a huge gap existing between housing demand and supply, whereas the existing housing units were overburdened, Durrani said, adding that per room ratio was 6.7 against 3.4 of international ratio.
The minister said that the increasing urbanisation due to the lack of job opportunities, lower facilities of health and education in the rural areas were also increasing the housing demand in cities.
When I had assumed the charge of this ministry there were only 30,000 kanals of land owned by the ministry and now it has reached 60,000 kanals and “we will construct houses on that land for lower income families to tackle the housing demand”, he added.
The minister also said that recently the government had signed a historic China-Pakistan Economic Corridor project worth over $46 million, adding that the project would generate economic activities and would be beneficial for the rural areas of Balochistan and Khyber-Pakhtunkhwa.
Durrani said that the ministry has also sought the permission from the prime minister to demolish the existing old flats and construction of high-rise multistory buildings to fulfill the housing facilities of lower income government employees.
SBP Governor Ashraf Mehmood Wathra said that house is the basic need of all humans and the development of housing sector is pivotal for sustainable economic growth.
The banking sector is unable to capitalise the true potential of the financing of the sector, as it comprises over 180 million population and its population is swiftly increasing, he said.
Wathra said that around 62 percent of the total population is residing in 10 big cities and according to a survey the demand for houses i8s increasing 20 percent per annum in the country.
According to a World Bank study conducted in 2008, there were a shortfall of 800 million houses and it is increasing with an average of 300,000 houses annually.
He said that the increasing housing demand is the major cause of the mushroom growth of slums outside these mega cities and it is affecting law and order situation, infrastructure development and economic development of the country.
Mortgage financing is less than one percent of GDP, which reflects that the sector is underdeveloped and undercapitalised in the country.
Addressing the forum, SBP Deputy Governor Saeed Ahmad highlighted the issues and challenges being faced by the housing sector development, including the affordable financing for house construction.
He said that around 56 percent of the total population is excluded from the direct penetration to credit, adding that an average of 600,000 housing units is required to fulfill the demand.
The housing sector in the country is able to construct only 300,000 houses, adding that there is a shortfall of around 900 million units in the country.
He said there is a scope for financing of one million consumers financing for house building, adding that during the next 20 years it would increase to 2.8 trillion.
The SBP deputy governor said that the current house financing is 0.4 percent of GDP and urged the financial sector to take benefit from the existing opportunities in the housing sector.
The deliberation of the conference would help formulate policies to increase the financing of housing sector and to provide decent housing facilities to the low-income families, he added.