The land of the pure became an independent state after a long struggle by Muhammad Ali Jinnah and his faithful followers. On the 23rd of March 1940, the Pakistan Resolution was passed at Iqbal Park Lahore, when the founding fathers promised that all citizens of the country would have access to education, nutrition, and housing facilities. The founding fathers would be disappointed if they saw how terrible the housing shortfall is in the year 2017.
Houses Less Affordable than Ever:
Back when the country was in its infancy houses were easier to come by. The income to price ratio is now 20:1 in Pakistan compared to a global average of 5:1 according to the State Bank of Pakistan. That means that even a 3 Marla house is beyond the reach of the majority of working people. With an estimated supply shortage of 9 million housing units, it is now at crisis point.
Why are Houses so Expensive?
Real estate developers do not target average Pakistanis; instead, they cast their net further afield to overseas Pakistanis with higher incomes. Those with wealth who repatriate income from abroad, have a knock-on effect of driving up prices and putting houses out of reach for middle and low-income earners.
The second reason for the unaffordable housing market is the immature housing finance market. According to The News International, the housing to finance GDP ratio is below one percent making it one of the lowest in the world. While Lamudi and Standard Chartered Bank have teamed up to make getting a home loan easier than ever, there is still a huge amount of red tape. And, in many cases, if you have not had a long history of savings you will struggle to get a loan.
What can the Government do?
First and foremost, the government needs to lessen the bureaucracy forced on developers who choose to serve the low-income sector of the real estate market. This will at least allow affordable projects to hit the ground running with minimal delay. It would be helpful for the government to incentivize banks to create alternative financing products for those who can’t get loans through conventional home loans. The government needs to change the traditional mindsets of people as many have outdated opinions about banks—many don’t even have a bank account. And, it is impossible for a Pakistani to get a home loan without a bank account, so this is an important part of the puzzle.
As Pakistan celebrated Pakistan day on Friday, it is a good opportunity to reflect on how far Pakistan has come as a country, but it is important to critique its shortcomings in under to ensure that the Pakistan of the future is not just for the well-to-do, but for all citizens. And, one day as the founding fathers dreamed of, each citizen will have a home of their own.