For millions of Pakistanis owning a place of their
own- be it a house or a flat- still remains a dream. Over the years the
gap between demand and supply of housing units has widened drastically
due to primarily sharp increase in prices of housing units, rising cost
of living and declining saving power. The short supply, in itself, has
further worsened an already bad situation as it has pushed up the prices
even further due to greater demand.
According to the Population and Housing Census of
Pakistan 1998 there were around 19.3 million housing units of all types
and sizes in the country of which about 68 per cent or 13 million were
in the rural areas and the remaining in the urban areas. Over the years,
and amidst high population growth, the widening gap between demand and
supply has resulted in a backlog which can only be eradicated if at
least 500,000 housing units are built per annum for the next 20 years.
This indeed is no easy task as according to estimates the supply of
housing units currently falls off by around 200,000 units per annum
against the demand at present. The gap between supply and demand, thus,
is widening with the each passing year to further worsen an already bad
The rising inflationary trends, the inequitable
distribution of income and levy of taxes and drastic increase in the
cost of construction have taken the worst toll on the middle class which
did manage to save enough to buy a housing unit as late as late
eighties. Today buying a house, or even a flat, has become an almost
impossible fete for the middle income segment of the society, not to
mention the low-income group. The emergence of the concrete jungles of
multi-storey buildings housing apartments across all urban centres of
the country is enough to prove this point. Housing has become the top
problem of the contemporary Pakistan today.
Over the years, the House Building Finance
Corporation (HBFC) played a vital role to help people help construct or
buy a housing unit or repair or reconstruct an existing one. Since its
inception in November 1952 the HBFC has provided over Rs 29 billion of
financing for the purchase or construction of 400,000 housing units. In
addition, it has provided bulk loan/investment of around Rs 1.8 billion
to 28 development authorities as well as public and private sector
organizations for the development of sites and construction of houses.
However, the growing population and the resultant
increase in the demand for housing units in the country can hardly be
met by HBFC alone, which introduced a new investment scheme called
"Ghar Assan" based on 'Diminsihing Musharakah" in March
this year. For many, the new scheme has been much more cumbersome than
the previous one. That highlights the need for the participation of the
private financial institutions in the house financing.
While many banks, particularly foreign, have been
engaged in house financing schemes for last many years, they primarily
target the affluent section of the society. These schemes, thus,
remained outside the reach of the middle and salaried classes who need
housing loans much more acutely. These schemes, thus, were directed to
those who could manage without them and any case collectively made up a
very small market away from the mainstream.
The huge backlog of housing units in the country has
resulted in pushing the total demand for house financing to a mammoth Rs
68 billion compared to a much smaller supply of Rs 3-4 billion. Bad? No,
actually much worse as clearing the backlog by developing 500,000
housing units for next twenty years means at least Rs 125 billion of
financing and that too if it is based on an extremely conservative per
unit cost of Rs 500,000 including 50 per cent self financing.
Despite these harsh realities a silver lining has
recently appeared in the sky. The fact that the Governor of the State
Bank of Pakistan, the central bank, has allowed the leasing companies to
finance housing. He also asked the leasing companies to introduce new
products to finance housing alongwith consumer financing which they were
allowed just a few months earlier.
Shelter the worldover is recognized as one of the
basic human rights today. However, without easy access to house
financing the vast majority of people would not be able to own a housing
unit here in Pakistan particularly amidst the widening gulf between the
have and have-nots, income disparity, inequitable taxes, declining
standard of living and shrinking saving power.
Despite the immense challenges posed by the financial
aspect of the housing backlog a beginning should be made and the
initiative this time around should come from the financial institutions
of which the leasing companies are an important part. Though the house
financing needs are immense, the leasing companies can, and should, play
an important part to help lessen the impact of a human problem of grave
consequences that the epidemic of housing poses. Certainly, the leasing
companies can play a pivotal role.