PAKISTAN – HOUSING DEMAND IN ISLAMABAD CAPITAL TERRITORY
The presentation is a comprehensive analysis of the housing sector in Islamabad, focusing on the factors influencing housing demand, current challenges, and policy recommendations to address the housing shortfall.
Introduction
Housing demand in Islamabad is shaped by several key factors:
-
Population Growth: An increasing population directly escalates the need for housing units.
-
Employment Opportunities: The availability of jobs attracts individuals to the city, influencing housing demand.
-
Infrastructure Quality: Well-developed infrastructure enhances the city’s appeal for potential residents.
-
Educational and Health Facilities: Access to quality education and healthcare services makes a city more desirable.goldcrestviews.org+1Affordable Settlements Center+1
-
Housing Costs: Affordable housing options are crucial in meeting the needs of various income groups.
Policies Influencing the Housing Sector
Several policies impact the housing sector in Islamabad:
-
Infrastructure Provision: Development of roads, utilities, and other essential services supports housing projects.
-
Land and Housing Development Regulations: Policies governing land use and construction standards affect housing availability and quality.
-
Construction and Materials Industry Organization: The structure and efficiency of the construction industry influence housing supply.goldcrestviews.org
-
Public Sector Involvement: Government initiatives and investments play a role in housing development.Affordable Settlements Center+2Pakistan Observer+2The News International+2
-
Informal Housing Units: The prevalence of informal settlements impacts the overall housing landscape.
Literature Review
The presentation references various studies:
-
Smith, Rosen, and Fallis (1988): Highlighted the unique nature of housing as a heterogeneous good with location-specific attributes.Affordable Settlements Center
-
Maclean (1994): Emphasized the imperfect substitutability of housing across different locations.
-
Zaki (1981): Reviewed housing conditions in Pakistan from 1960 to 1980, noting issues of congestion and low quality.
-
Pasha and Ghaus (1990): Analyzed trends indicating significant improvements in housing conditions over time.
-
Nazli and Malik (2003): Discussed housing as a critical component of poverty alleviation strategies.
Housing Sector in Pakistan
According to the National Housing Authority:
-
Housing Stock: Approximately 19.3 million units, with 32.3% in urban areas and 67.7% in rural regions.
-
Housing Types: 21% pacca (permanent), 40% semi-pacca, and 39% kutcha (temporary) structures.
-
Household Size: An average of 6.6 persons per house.
-
Occupancy Rate: 3.3 persons per room.
-
Housing Shortfall: A deficit of 4.3 million units, with an annual requirement of 570,000 units but a production of only 300,000 units, leading to a recurring annual shortfall of 270,000 units.
Housing Finance in Pakistan
Arshad (2003) noted that the House Building Finance Corporation (HBFC) predominantly provided loans to upper and upper-middle-income groups, with only 23% allocated to lower and lower-middle-income groups. The State Bank of Pakistan has been promoting housing finance by encouraging commercial banks through concessional re-financing rates and relaxing the debt-equity permissible ratio to 80:20, increasing the maximum borrowing limit to Rs. 7.5 million.Affordable Settlements Center
National Housing Policy
The policy addresses core issues related to:
-
Land Matters: Streamlining land acquisition and development processes.
-
Housing Finance: Enhancing access to affordable financing options.
-
Construction and Services Sector: Improving standards and efficiency in construction practices.
-
Low-Cost and Rural Housing: Focusing on affordable housing solutions for low-income and rural populations.
-
Building Materials and Infrastructure Development: Ensuring quality and availability of construction materials and infrastructure.
-
Building and Zoning Regulations: Implementing effective regulations to guide urban development.goldcrestviews.org
-
Institutional Framework: Establishing robust institutions to oversee housing sector development.
Islamabad City Overview
Established in 1959, Islamabad spans a total area of 906.0 sq. km, comprising 440.3 sq. km of municipal area and 465.7 sq. km of rural area.
Demographic Characteristics
The city’s population has been growing, leading to increased demand for housing.
Housing Sector in Islamabad
The city’s housing profile includes approximately 75,000 existing units in various sectors, with a demand for 125,000 units, resulting in a shortage of 50,000 units. Additionally, there is an annual demand for 4,000 new units.
Level of Congestion
High occupancy rates indicate significant congestion in existing housing units.
Nature of Tenure
The tenure distribution in Islamabad includes both ownership and rental arrangements, with variations across different sectors.
Sectoral Allocation of Housing Units
The allocation includes:
-
Residential: Not more than 55%
-
Open/Green Spaces/Parks: Not more than 8%
-
Roads/Streets: Not less than 26%
-
Graveyards: Not less than 2%
-
Commercial and Parking: Not less than 5%
-
Public Buildings: Not less than
Housing differs from the standard Neoclassical good; it is heterogeneous and its spatial fixity means that the location of the housing stock matters to households. Promoting the Concept of Housing Finance. Encouraging the commercial banks by re-financing them at concessional rates. SBP has relaxed the debt-equity permissible ratio up to 80:20. while enhancing the maximum borrowing limit to Rs. 7.5 Million.