‘Urban poor are priced out of the housing market’

KARACHI: Architects and academics recently discussed the burning issue of housing and the devastating impact of speculation, which has priced the urban poor out of the housing market.

Pakistan has a burgeoning housing crisis is an oft repeated phrase by academics and the civil society, who consider housing as an essential right of every human being.

To discuss and find ways and means to address the crisis and ensure the provision of the essential right to multiple stakeholders, Sir Syed University of Engineering and Technology (SSUET) held a hybrid – on campus and Zoom – roundtable on “Housing Challenges for Urban Poor” on Friday.

The participants included architects, engineers, planners and academics from various local and international institutes.

Discussions revolved around themes, including the right to housing; political economy; on-boarding of the private sector to address the housing deficit; lack of financial access; distortion in demand and supply; and the absence of policies needed to address the issue of housing the poor.

Dr Noman Ahmed, dean faculty of architecture and science at NEDUET, gave a short presentation on the status of housing in Pakistan and the financialization of the housing market. He also briefed about his contributions in the book “Power, Profits & Plans: The Political Economy of Housing in Pakistan” published by the Pakistan Institute of Development Economics (PIDE) in 2023.

Focusing on the status of housing and the structure of land supply, he identified the multiple lenses through which housing was currently viewed, and highlighted the process vs product and market vs right debates.

Dr Noman also said that common stakeholders found in the present situation considered housing as a commodity connected to the market economy. Identifying the stakeholders, the scholar divided them into three broad categories – beneficiaries, affectees and facilitators.

“The beneficiaries or market mechanisms are obviously investors, builders, developers and also people belonging to housing finance organisations, professionals, contractors, and all those who are associated with housing in a commercial manner,” he said.

Affectees of this market are the urban and rural poor, agricultural workforce, livestock farmers, indigenous communities, and initial owners and occupants. The facilitators of this situation are various government agencies that carve out land to supply for real estate; regulatory authorities; the politicians who try to strike links and facilitate the process; and the law enforcement agencies.

The professor also pointed out the scale of complexities in the matters of institutional responsibilities in the different tiers of government, from planning and development, all the way to delivery, which also increases the challenges in housing access and adds to the demand-supply gap.

Elaborating on the demand-supply gap in housing, Dr Saeed Ud Din Ahmed, associate professor at NEDUET, said that the low income group, which forms 75 percent of the population gets the minimum supply of housing. On the other hand, the 5 percent elite or the middle income 20 percent get the highest supply of housing. “Rather, there is an oversupply in these two income groups, whereas there is an undersupply of housing for the low income group,” he added. There was a need to invert this situation, Dr Saeed said, reminding that the private sector was providing the majority of the housing stock, at least in Karachi.

He questioned if the private sector could be lured to work in the low income group, and under what models was that possible.

Suggesting the cooperative model, Dr Saeed said that cooperatives “can be brought in on an individual level; in small groups, who can then take up this model to address the housing demand”.

In Pakistan, housing cooperatives developed as an institutional arrangement for individuals with low or middle income to enable access of affordable housing by minimising or eliminating the profit of builders. Its legislative framework predates partition, and it was formed to provide its members with residential properties and related amenities.

Further elaborating on the housing challenges, the participants also discussed the migration patterns, and how the lack of resources, in the absence of affordable housing supply leads to the formation of katchi abadies or informal subdivision of agricultural land on the periphery of urban settlements.

The host of the event, Fazal Noor, head of the Architecture and Environmental Design Department of SSUET, questioned the relevance of incremental housing and the regularisation of katchi abadies in the situation, where the “urban poor are priced out of the housing market”.

It was pointed out that “informal housing” often offered miserable living conditions and there was need to come up with better mechanisms to address the problems arising out of the formation of katchi abadies and slums.

Architect Vassilis Sgoutas from Greece, who has been working since 1961 on large scale projects in Greece and the Middle East, spoke about regeneration of urban slums with user participation and tenure security. Using the example of the Caracas slum upgrade project from Venezuela, Vassilis asked the government to follow a twin formula, where it allows tenure security, and takes the responsibility of developing infrastructure to encourage people to build their own houses on self-help basis.

Shahed Khan, associated with Curtin University in Perth, reiterated the idea of user participation. “The government should provide developed land to the poor, which they can build on as per their aspirations,” he said, while also discussing the idea of inclusionary housing.

“In US they have a condition that 10 percent of development should cater to the lower income group. If we do this on the city level, there may be a chance to improve the housing deficit,” Shahed said.

With the financialization of the housing market, land value has been increasing incessantly as well, limiting the housing affordability of the urban poor. Inclusionary policies could incentivise developers to add affordable units in developments that are not based on market rates.

As per the PIDE book “Power, Profits & Plans”, the Punjab Housing and Town Planning Agency (PHATA), following the US model of housing tax credits, plans to offer tax relaxations to developers offering affordable housing.

In terms of the hurdle of speculative housing and resultant surge in land value, the participants also pointed out that Pakistan’s overall investment climate was very murky in terms of attracting savings and investments from domestic and overseas residents.

“For example if we look at the various types of financial products that are offered to attract savings, we find that the overall trust in other enterprises, other than real estate, is declining. Even in productive enterprises, such as industrial, manufacturing, and trading enterprises, most of the ordinary investors, find these very high-risk and are not interested to invest their capital in these options,” Dr Noman said. “So, since real estate appears to be a safer option for parking excess capital, it becomes a natural choice for starting an enterprise by itself.”

He recommended to look at the comparative options so that the huge capital, both within the country as well as the capital pouring in from overseas Pakistanis, finds an investment opportunity.

A question was raised if overseas Pakistanis could be incentivised to invest in low income housing.

In response, Aquila Ismail, presently working with the Karachi-based development NGO, Orangi Pilot Project (OPP), said, “Overseas Pakistanis cannot be expected to invest in housing for the poor”, instead, welfare housing was the need of the hour.

“Housing is extremely important for the poor, as identity lies with where one lives as well,” Aquila said, alluding to the idea that housing was essential for upward mobility, as it gives people a strong foundation to move out of poverty.

Although access to housing for the poor is an issue in both rural and urban settings, the intensity of the challenge is more concentrated for the urban poor. Shortage of financial products in terms of the housing sector, and the high-risk associated with the provision of housing credit, make housing accessibility even more difficult for the low income group.

Humaira Nazir, assistant professor at SSUET, talked about her involvement with the upgrade of rural communities and houses in Sindh, especially for the communities affected by flash floods last year.

Samar Shamim, assistant professor and academic coordinator at SSUET, urged for the implementation of non-utilisation tax to discourage speculation, while also calling for policies to address the climate crisis.

The event focused on understanding the political economy and coming up with ways to effectively deal with the housing crisis as it expands due to internal and external migration waves, industrialisation, and population growth.

Participating institutes included NEDUET, Nazeer Hussain University and IVS from Karachi; UET Lahore; and International Union of Architects that was represented by their member architect Anju Malla Pradhan of Nepal.