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Making housing market better, affordable

Published on 11th Aug, Edition 32, 2014


In the quickly transforming commercial world, houses are no more just places offering shelter to mankind but it is becoming a serious issue to meet the affordable housing due to the changes in the traditional economic base of communities, population increases, changes in the number of units in the housing stocks, and the rising costs of new construction. In the altered situation, houses have become more and more significant to the sustenance of entire economies.

Pakistan is facing harsh shortfall of housing and the backlog is quickly increasing with the rise in population growth. Despite of constant projects still there is a shortfall of almost 8 to 10 million houses in the country. As against demand, government has planned to construct 1.0 million houses yearly. Only Punjab province is facing a shortfall of 5 million houses. There is an incremental need for 0.7 million units yearly against the annual building of over 0.1 million units. The supply and demand gap is resulting into grave repercussions for the citizens as it has altered greater than half of Pakistan urban land into squatter settlements and is eating away the agri land of Pakistan. Therefore, the requirement of the hour is to exploit the unseen potentials of the construction and housing industry.

Housing construction activity not only improves the lifestyle of the society but even help improves economic growth and environment in the country. The Pakistan’s construction industry is directly connected with the population growth and also affects greater than 40 industries.

Population growth

Presently, Pakistan is 6th most populous country in the world with a predicted population of 184.35 million or 2.0 percent growth rate during FY2013. Under these circumstances, it is predicted that the country will attain 5th place globally in terms of total population in 2050. Over the years, this growth has created harsh shortfall of housing units. With less than 0.2 million houses built yearly, the country is facing a shortage of 0.6 million. If situations would go on the same pace, Pakistan’s total deficit of houses is predicted to touch 20 million by 2025.

Mortgage non-availability

Several Pakistani banks offer home loans but these loans are obtainable for rich or upper middle-class citizens since only these citizens belonging to high social tiers can meet the severe loan situations. For lower middle-class or citizens with monthly income ranging between Rs10,000 to 25,000, there is barely any loan alternative or obtainable facility. It is reported that, housing-finance-to-GDP ratio in the country is just 1.0 percent whereas India has 7.0 percent and 50 percent is recorded in rest of the developed world.


Housing stocks

In Pakistan, greater than 50 percent housing stock is 30-year old. These houses have several design, structural and sanitation challenges. A lot of houses are made of mud and are susceptible to natural disasters such as moon-soon rains and earthquake. Many hazards have been observed because of falling down roofs during disasters. These houses either need appropriate maintenance or replacement with fresh housing units with modern amnesties or sound structures.

Low-Cost housing units

Pakistan has assigned Rs26 billion as housing credit for low-cost housing units to allow the poor to own their house. It is said that citizens from dissimilar walks of life dismissed the distribution as too little, 90 million Pakistani citizens live below the poverty line and these credit would give houses to a few thousands only.

The Government of Pakistan has planned low-cost housing guarantee scheme in the current budget under which it would give housing credit for low-cost housing units. Financial institutions and banks will offer loans of up to Rs1.0 million under this scheme while the government will guarantee 40 percent of the portfolio amount. The scheme will cover entire regions of the country and 25,000 loans value of Rs20 billion will be offered to encourage middle and low income households to own homes. The federal government allocated Rs6 billion for the PM’s low-cost housing scheme for FY15. Any citizen whether, she/he is a government employee or private, with an utmost monthly income of Rs30,000 would be entitled to apply for the scheme. The Government of Pakistan has also budgeted to create Rs15.5 billion during FY15 as compared to Rs21 billion budgeted for FY2014, which was later reallocated to Rs13.5 billion from WWF (Workers Welfare Fund) under the head of direct taxes. WWF has done 110 housing schemes since its inception during 1971, while 25 housing schemes, consisting of 1,297 houses, 10,878 flats, and 248 barracks are ongoing. Moreover, WWF has done 31 schemes of plots development while over 60,000 workers have advantaged by all these schemes.


No doubt, we need to have a latest and accurate population census of Pakistan as well as number of households to find out the accurate number of housing shortfall we are facing presently. Secondly, land should be given free of cost to citizens who cannot purchase land to build their own houses. Lastly, like Youngster Loan Scheme, the government should also offer cheaper loans for building of houses. A sincere attempt from top level is needed to deal with the prevailing housing shortfall in the country.


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