KARACHI: Housing finance to GDP ratio of below one percent in Pakistan is one of the lowest in the world, a senior central bank official said on Tuesday.
“Unless we effectively promote house financing by using our existing financial institutions and also create enabling environment for specialised housing finance institutions, the dire shortage of housing will continue with its negative social consequences,” a statement quoted Saeed Ahmad, Acting Governor at the State Bank of Pakistan (SBP) as saying.
Ahmad was speaking at a ceremony during which an agreement was signed between Pakistan Mortgage Refinance Company, officials of the ministry of finance and banks.
Highlighting a rising demand of housing units in Pakistan in the backdrop of rapidly growing population and escalating real estate prices, Ahmad said the two key impediments in housing finance (non-availability of long term liquidity and issue of foreclosure laws) have now been addressed.
He urged the chief executive officers of the banks to positively contribute towards meeting the unmet demand of low-cost and affordable housing in the country. Citing a World Bank’s report, he said there is an estimated backlog of 7.5 million housing units in 2009, which are increasing 300,000 units every year.
“Apart from being the biggest asset of a common person, housing plays an important role in the long term economic development,” the SBP Acting Governor said. “More than 40 industries and 70 percent of the unskilled labor force are attached with the housing and construction sectors.
Keeping in view the socio-economic benefits of housing and construction sectors, SBP has undertaken housing finance as a priority lending area.”
He acknowledged support provided by the government in setting up Pakistan Mortgage Refinance Company, which can act as a conduit to efficiently connecting long-term investors with primary mortgage lenders generating long-term assets in Pakistan, thus helping develop a debt market and a longer term yield curve. The banks lauded the efforts made by SBP and government in conversion of concept into a long-awaited reality.
