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Has low-cost housing taken precedence?

Low-cost housing is the dire need since the housing backlog is around 10 million units in Pakistan at the moment. Let alone the impoverished and the poor or the working class to be precise, even the lower-middle class cannot think of buying a house in the wake of high inflation coupled with rising unemployment. Those earning up to Rs80,000/- (eighty thousand rupees) per month find it hard to keep body and soul together. The construction cost has spiked particularly by virtue of skyrocketing prices of steel and cement at this juncture. Irrespective of downscale or upscale areas, house prices have soared leading to a hike in house rents to an unprecedented level, which have caused havoc for those who are tenants in particular.

The Naya Pakistan Housing Program (NPHP) is in a certain way a ray of hope for millions of poor Pakistanis. It is marvelous to know that the government will provide land and infrastructure facilities to builders and developers to ensure the success of the housing scheme. Moreover, the government has made headway in terms of a foreclosure law which was a primary impediment in this regard. There are certain glitches, which need to be coped with to ensure the success in essence. The entire family income must be considered in this regard. If the monthly income of an entire family consisting of 6 members is less than Rs 100,000/- (one hundred thousand rupees), it is unlikely for such a family to pay hefty down payments and installments. How could they pay between Rs0.5m and Rs1m as down payment? House prices ranging from Rs4 million to Rs13million are beyond the affordability of millions of Pakistanis. Hundreds of thousands of households struggle to feed their families, let alone avail the facility of buying even a low cost house in this era of skyrocketing inflation.

There is no denying the fact that the concept of Naya Pakistan Housing Program (NPHP) is splendid in the given circumstances however the ground realities must be considered as well. Millions of impoverished Pakistanis only think of two meals a day since owing a house even in a shanty area is a luxury. The government also does not have fiscal space to offer free housing to the impoverished in particular. However, certain steps may work wonders such as no down payments and monthly installments corresponding to the monthly rent of a certain house. Besides, the banks may think of recovering the amount not in 10, 20 or 30 years but in 50 years which would bring down the monthly installments drastically. If done, this would be a paradigm shift benefiting millions and the conundrums of housing backlog could be tackled over the period. The statement bank financing at subsidized and affordable markup rates is vague. Economical housing projects for low-income segments of society envisaged by the incumbent government is a tremendous step however the enforcement of it may need ample brainstorming. The PTI-led government has almost 50% of the total time left which calls for the immediate steps in terms of adhering to its manifesto and the delivery of the promises.

It is worth mentioning that the recent step taken by the Prime Minister regarding a subsidy of Rs30 billion for the Naya Pakistan Housing Project (NPHP) would underpin the construction industry and might be instrumental in employment generation. Let’s see what transpires in the not-too-distant future. It is noteworthy and is the topic of the discourse these days that house financing by the financial institutions is the answer to owing a house in Pakistan. It is exemplary in Europe where house financing by banks is 90% vis-a-vis 0.2% in Pakistan. Even it is 10% in our neighboring country which is the house of the largest slum in the world. Professionals cite lack of foreclosure laws for abysmal house financing in Pakistan. Since the government is addressing rather have addressed numerous glitches, there is a ray of hope that a large number of the populace would be able to own a house in the days to come in the wake of the revolutionary steps taken to boost the real estate and construction sectors of Pakistan.

Low cost housing is an ongoing step to be taken since population shift is widespread not only in developed but also in the developing countries. Since the populace moves from rural to urban areas, housing backlog would always be an issue unless addressed from time to time and if the concrete measures are taken in this regard.

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