Naya Pakistan Housing Scheme, Pakistan

According to 2017 census, Pakistan’s population is 207.7 million and has grown at the rate of 2.4 percent per year. The urban population is estimated to be 75.5 million in the same year hence the housing demand in Pakistan is 350,000 units per year. According to Association of Builders and Developers Real Estate Research 2016, a housing backlog of 10 million units exists in Pakistan. In big cities of Pakistan, slums are overloaded due to which majority of the people living there are forced to sleep on footpaths. Affordable housing lacks in the country. The Ministry of Housing and Works, has introduced construction of 500,000 houses for low-income groups in 2015. Sites identified for construction included Charsadda, Bannu, Lakki Marwat, Dera Ismail Khan, Lahore, Jehlum, Karachi, Hyderabad, Quetta and Gwadar. However, these projects have not been successful in achieving their goal to the fullest due to weak regulatory authorities. This piece of work aims to analyse policies under PM Imran Khan’s government regarding providing safe living for lower and middle class, slums and kachi abadi under the newly launched “Naya Pakistan Housing Scheme”.

Approximately 68 percent of the urban working population is employed in the informal sector of the economy without a verifiable or steady source of income. Both the State Bank’s Policy and the Naya Pakistan Housing Scheme are targeting borrowers earning less than 60,000 rupees.

The current government’s housing policy is a combination of the naya Pakistan housing program and State Bank of Pakistan’s ‘policy for promotion of low-cost housing finance’, introduced in July, 2018. Through this scheme, the government aims to build 5 million houses for low income groups. The establishment of Naya Pakistan Housing Authority was planned earlier this year but no final action has been taken yet. Construction of high rise buildings is signified as to increase the capacity of houses over a specific area. China, Egypt, World Bank would financially support this housing project. During the first phase of the project, in Islamabad, 25000 apartments are to be built for the federal government employees, the remaining 110,000 apartments will be built in Balochistan including the housing society for fishermen in Gwadar. The second phase of registration for Naya Pakistan Housing Project was announced on 15th July 2019. According to the PM, the registration process would enable the relevant authorities to ascertain about the public demand and launch housing projects in the areas where they are required.

The successive governments fail to understand the dynamics of housing crisis which has resulted in ineffective policies. This is due to lack of preventive measures taken into account like unemployment and poverty that give rise to housing crisis. As of now, the government has not been able to build any house through this new scheme. With 49 months left in office, it would need to construct about 100,000 each month from August 2019 to accomplish its goals. With an increase in cement price, the cost of constructing houses will rise; hence it would become more difficult for the government to finance the housing scheme.

Approximately 68 percent of the urban working population is employed in the informal sector of the economy without a verifiable or steady source of income. Both the State Bank’s Policy and the Naya Pakistan Housing Scheme are targeting borrowers earning less than 60,000 rupees. Paying instalments for them will get complex in future as the prices of other necessities are rising.

Indeed, the Naya Pakistan Housing policy is a remarkably ambitious policy scheme. It offers economic growth, and improved equality. However, there is a fear that the housing policies are often threatened by interests of rent-seekers, elites and the lobbyist. Interest groups, who tend to communicate their interests to the policy makers, put a stop to implementation and prevent inclusive growth.

The inefficiency of government in planning, delivering and monitoring very large and ambitious projects may render the genuine effort being invested in Naya Pakistan Housing Scheme. Even if five million houses are not delivered, this program can be beneficial if it can leave a positive impact on the housing market which could be beneficial for middle and lower income Pakistanis. The housing schemes in action tend to allocate funds either to interest groups, like the retired federal government employees, who use their access and privilege to secure subsidised land and housing (as in the case of the Kuri housing scheme in Islamabad) or to resourceful real estate agencies, who use their contacts to secure large areas of land at cheap prices, only to ensure insanely high profits.

The State Bank of Pakistan’s policy possesses a spirit to address housing deficit. In a policy paper of 2018, the SBP had indicated its intent to make mortgages and financing low-income houses easier for consumers, the banks and financial institutions that would provide the loans.

The cost of building a house is high-priced, for all classes except for Pakistani elite. Most countries that managed to avoid the kind of housing deficit, the way Pakistan has, the driver of housing growth is a viable mortgage sector. In short, the ability of ordinary people, of ordinary means, to walk into banks and have a range of options that allow them to borrow money to buy or build a house, this lacks in Pakistan.

The PTI government undertaking such a huge venture, will now have to focus exclusively on planning and implementation of the goals. The core issues need to be addressed while keeping in mind the needs of people and the time frame rather than focussing on superficial problems.

There is still the problem of transparency. Given the sheer size of this program, the government needs to produce a document outlining ground details, taking into account urban planning and whether the regulatory and legislative challenges within the housing market will be addressed.

In the developed countries, it is not the job of government to construct housing schemes themselves as neither there is fiscal space to provide financing nor the technical capacity to execute. All what a government can do is to provide an enabling environment which creates commercial sense for builders to guarantee solutions including low cost housing, and to provide housing finance for buyers at affordable rates to generate demand. The PTI government undertaking such a huge venture, will now have to focus exclusively on planning and implementation of the goals. The core issues need to be addressed while keeping in mind the needs of people and the time frame rather than focussing on superficial problems. In addition to building houses, the condition of slums needs attention which should be addressed through a detailed urban management policy. All the housing policies in the country need to be aligned focussing on common targets and strategies to curb the housing concerns in near future.

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