Pakistan’s housing shortage stands at 7.57m units: WB
By Mehtab Haider
WASHINGON: The housing shortage in Pakistan stands at 7.57 million units as housing finance-to-GDP ratio in the country is below one percent compared with seven percent in India and 50-70 percent in the developed world, a report launched by the World Bank revealed.
The report titled “Expanding Housing Finance to the Undeserved in South Asia” was launched in the presence of State Bank of Pakistan governor Shahid Hafeez Kardar.
The report said that the unwieldy land administration, unprecedented rises in land
prices and inadequate mortgage lender experience with lower income housing prevented the market from advancing in the provision of housing and housing finance solutions.
“Pakistan is facing unprecedented challenges of acute housing shortages, unhealthy living conditions and a non-existent or dilapidated infrastructure across the country,” it said.
Housing shortage stood at 4.33 million units in 1998. Factors responsible for this massive increase are population growth, year-on-year short supply and depletion of existing stocks, said the report.
There is demand for 0.7 million housing units every year owing to population growth, but only 0.3 million are built, leaving a shortfall of 0.4 million units.
The WB report also stated that only five percent of the population was provided housing loans. Banks do not provide loans to middle income or low income groups. For middle income group there is House Building Finance Corporation (HBFC), but there is no institution for the lowest income group with earning below Rs 6,000. It faces housing shortage of 1.5 million units.
The WB report pointed out that there were regulatory weaknesses creating continued uncertainty on property and housing finance transactions. An inefficient legal framework, fragmented ownership and titling procedures, ineffective land information system, inaccessible government land, high stamp duties and registration fees, a weak tax framework and ineffective land dispute mechanism dampen the willingness of banks to increase their mortgage portfolio, said the report.
In Karachi, 17 different agencies are responsible for land titling and registration, stamp duty and registration fees can go up to nine percent in some provinces and land registration is manual, non-transparent and cumbersome.
High economic growth coupled with rapid urbanisation and a rising middle class have created considerable demand for housing and housing finance in South Asia, said the report.
Around 30 million middle- and lower-class households in South Asiaówhich
accounts for 11 percent of the region’s populationóare willing to pay, but unable to have access to mortgages. In India alone, estimates of the housing shortage range from 20 million to 70 million. As much as half of this demand can be profitably serviced by the housing and housing finance markets, said the report.
One in every four people on the planet live in South Asia, and more than
14 percent of South Asians have no home, not counting a further 45 percent living in overcrowded units. The region’s future economic growth, social development, and employment are tied to providing housing and funding for home-ownership, the report noted.