SOCIAL DEVELOPMENT AGENDA HOUSING AND HOUSING FINANCE IN PAKISTAN

Introduction

The document “Social Development Agenda: Housing and Housing Finance,” prepared by Zaigham M. Rizvi, addresses Pakistan’s significant housing challenges and proposes strategic interventions to improve housing accessibility, particularly for low and middle-income populations.

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Pakistan’s Housing Landscape

Pakistan’s population, estimated at 180 million, experiences a household growth rate of 0.7 million units annually, considering an average household size of 6.6 individuals and a population growth rate of 2.5%. Urban areas face a shortage of approximately 3 million housing units, predominantly affecting the Economically Weaker Section (EWS). The overall housing backlog exceeded 8 million units as of 2012, with rural areas contributing a deficit of 5 million units. The annual housing supply ranges between 250,000 to 300,000 units, insufficient to meet the growing demand, thereby adding 300,000 to 400,000 units to the backlog each year. Additionally, the deterioration of existing housing stock further exacerbates the shortage.​

Proposed Strategic Interventions

To address these challenges, the document outlines a phased approach:

Phase 1: Initial Three Months

• Establishment of the Housing Consultative and Advisory Commission (HCAC): The government is advised to form a commission led by an expert with international housing experience. The HCAC’s responsibilities include drafting a National Housing Policy focused on affordable housing for lower-middle, low-income, and EWS segments, recommending fiscal and regulatory measures to promote housing, and assisting provincial governments in policy development and implementation. After the initial phase, the HCAC may transition into a permanent body reporting directly to the Prime Minister’s Office.​

• Role of the State Bank of Pakistan (SBP): The SBP is encouraged to play an active role in promoting housing finance, aiming to increase the Mortgage Debt (MD) to GDP ratio from the current 0.5% to 5% within five years. This target aligns Pakistan with regional counterparts like India, Thailand, and Malaysia.​

• Role of the Securities and Exchange Commission of Pakistan (SECP): The SECP is tasked with regulating housing supply agents, including developers and construction material industries, ensuring that residential projects adhere to approved specifications and timelines.​

Phase 2: Subsequent Three Years

• Fiscal and Regulatory Incentives: The government is advised to provide fiscal incentives, such as tax relief, to encourage private sector investment in affordable housing. Relaxation of certain building regulations is also recommended to facilitate low-income housing projects. Additionally, urban planning should focus on developing new habitats with adequate social and physical infrastructure.​

• Revitalization of the House Building Finance Corporation (HBFC): The HBFC’s role should be redefined to focus on providing housing finance to low and middle-income segments. This includes streamlining its operations and aligning its objectives with broader housing policy goals.​

• Enhancement of Financial Products: Financial institutions are encouraged to develop diverse mortgage products tailored to the needs of various income groups, including long-term financing options with affordable interest rates.​

Conclusion

Addressing Pakistan’s housing crisis requires a multifaceted approach involving policy development, financial sector engagement, regulatory reforms, and active participation from both public and private sectors. The proposed interventions aim to create a sustainable housing finance ecosystem that caters to the needs of all socioeconomic segments, particularly the underserved EWS. Implementing these strategies effectively will necessitate coordinated efforts, adequate resource allocation, and continuous monitoring to ensure that the housing needs of Pakistan’s growing population are met.

Also Read: PAKISTAN HOUSING FINANCE SECTOR