As a worldwide commonality housing backlog is the biggest outcome of continued urbanization. Land, infrastructure, finance, administrative bodies, real estate markets and most importantly role of government are most significant factors in this regard, and the tool through which the governments intervene is usually known as housing guideline or housing policy.
Pakistan’s population explosion and rapid urbanization has left a growing number of people without access to decent, stable, affordable housing. The last census, documents a housing stock of 32.2 million, of which 39% is urban. Pakistani households tend to be large with an average of six to seven persons living and eating together in a single household. The per person room density is 3.5 as compared to the international standard of 1.1 per room. The typical household in Pakistan has an average of 6.7 persons, but about one-quarter (26 percent) of all households have four or fewer members.
The urban population is expected to grow by 2.3 million people per year over the next 20 years. This translates into the demand for 360,000 households, at 6.3 individuals per households. Pakistan has a very critical shortage of housing units. It has been estimated that we already have a backlog of around 7 million housing units, and this accumulates by 270,000 units every year. Furthermore, the less than satisfactory conditions of existing housing facilities, contributes adversely to the quality of life of people of Pakistan. This situation is going from bad to worse in urban cities and towns, where more than half of the population lives in slums or irregular settlements. Housing finance remains largely underdeveloped in Pakistan. It is expensive and still limited in favor of higher income populations only. Private mortgages remain small and unaffordable.
In order to realize the potential of housing finance in Pakistan, the policy makers need to actively address the challenges facing the sector, in collaboration with the private sector. They should consider to strengthen the property rights, land development and property development framework. Government should introduce targeted housing finance programs, support the building industry and facilitate the development of the primary and secondary housing finance market, and introducing targeted housing finance programs. The effect of urbanization has been greater in developing countries. This is where the planners, the architects and the policymakers has a key role to play. They have been putting forward some integrated and practical recommendations to control the constantly worsening situation of housing sector. Every country develops its own housing policy in accordance with the urban context and the needs of urban poor. Development and implementation of the housing policy has been practiced widely throughout the world. However only a few countries considered the low-income groups of society in true spirit while devising the policy. Pakistan also developed its first National Housing Policy in 2001 but the implementation and success of this policy is still debatable.
The different kinds of housing policies, employed and practiced throughout the world, can be categorized into four basic types: policies related to demand and supply and policies promoting home ownership and rental housing. The Table-1, appended below is characteristic of policies developed throughout the world falling among four major types:
| Table 1|
Outline of housing policies based on four dimensions
|Dimension||Owned Housing||Rental Housing|
|-Cash reimbursements for housing|
-Subsidies for housing sector
-Drop in interest rate of mortgage plans
-Mortgage interest subtraction from income tax
-Improved quality standards
-Property levy on housing procurements
-Regulations in loan-to-value and debt-to- income ratios
-Constraint of new purchases
|-Fixed volume cash grants|
-Controlling the rents
|Supply Side||-Municipal housing|
-Subsidies to contractors
-Raising quality standards
-Subsidy to suppliers
|Source: Asian Development Bank Institute|
Unfortunately the Pakistan Government is not effectively managing the issues related to housing sector. The magnitude of housing shortfall is on high increase rate in comparison to growth of population. The configuration of country’s housing stock based on index of ‘average number of persons per room’ clarifies a rise in the percentage of housing units with a steady surge in the average number of persons per room on state and regional scale. The constraints facing the housing sector in Pakistan using three main postulates: Insufficient land development framework, the embryonic property development framework and the emerging building industry.
Insufficient land development framework
Financial institutions are reluctant to provide construction finance, and individuals are reluctant to apply for mortgages. The property régime suffers from low public confidence. A history of scams, financial weaknesses, and the absence of clear, uniform, and fair business practices have tarnished its credibility. There is a strong need to strengthen the property titling/land administrative procedures. The system is adversely plagued by:
- Inefficient legal framework
- Fragmented land ownership and titling
- Inefficient land information
- Unused government
- Weak tax framework and enforcement environment
- Ineffective land dispute resolution mechanisms
Embryonic property development framework
The institutional framework for acquiring land available for construction and subsequently selling the constructed housing units is underdeveloped. The property development process is constrained by many factors, Like:
- Poor master planning
- Multiple institutions and administrative procedures
- Problematic zoning restrictions
- Restrictive building
- Unreliable utility connections
Emerging building industry
An active and competitive building industry is required to sustain an affordable supply of housing. Such a market can be encouraged by the elimination of regulatory barriers to entry, removing monopolies, facilitation of equal access of small firms and inputs, removal of constraints to the development and use of local building materials, and construction methods.
- Fragmented building
- Unorganized real estate agencies
- Lack of developer finance
- Skewed tenant laws
The problems facing the financial sector in their attempts to increase their housing finance portfolios are not insurmountable. Each can be addressed with deliberate and consistent public sector reforms at the national and federal levels. In fact, individually, none of the problems listed in this section can completely forestall the development of the sector. However, collectively they present a serious concern for the long-term development of the sector.