Housing in Pakistan: Challenges and Way Forward

An investment in real estate goes a long way and it is widely believed that it always appreciates unless there is a real estate crisis or political instability. As an investor, one must keep tabs on the market condition, demand and supply of real estate and buying power of the other investors and buyers in order to get a better return on investment. According to the State Bank of Pakistan, Pakistan faces a shortage of 700,000 housing units annually and only half of the demand is being met. Such housing shortfalls can occur in any country due to various reasons. In this blog, we have pointed out a few causes of housing shortage and its long-term effects.

Increased Cost of Construction
There are numerous small industries that are associated with construction and building. Most people only consider land, buying bags of cement and steel are the major costs in construction. However, there are a lot of other costs too that are involved. Finishing and cost of labour accumulate to become a huge portion of the total costs. When the cost of construction increases, profit margins of builders and developers decrease which is why an increase in prices of built units is anticipated by buyers. Similarly, if a person is building a home for the purpose of living there, the cost of construction directly affects their budget which is why many don’t even begin to build. Unless there is a subsidy provided by the government on construction materials, it is extremely difficult for a common man to build a home.

Scarcity of Land in Cities
There can only be enough space in any city to develop new residential projects. While builders and developers are now developing Peri-urban housing societies which are on the outskirts of cities, most people still prefer to live within cities from where they have close access to work, schools and medical facilities. Land for new developments within a city is becoming scarce while the demand for residential projects is constantly increasing. Another important point because of which shortage of housing units is being caused is an inefficient use of land. Vertical residential projects are the most efficient use of land where more can be achieved with fewer resources. This not only saves the additional cost of land but also increases the number of units built.

Migration to Metropolises
Bigger cities are known to have more and better facilities for education, health and career growth which is why people from smaller cities and towns move. Most of the time it is only one person moving so they rent a small apartment or a room but the eventual plan is to move all the family with them. The process of migration increases the population and demand for residential units and becomes a major cause of housing shortage in a city. The impact of migration is only on cities where people are moving for better facilities and opportunities. It hardly impacts nearby areas but creates an extra unit available in another city or town. This is the reason why the problem of shortage of houses is usually in bigger cities and even with continuous supply, the demand is not being met.

Lack of Low Cost Housing
Housing is a basic need and just like food and water, it is also important for the growth and survival of humans. The increased demand for houses due to other factors leads to the development of slums, homelessness, higher property prices and unhygienic ghettos and slums. The higher the price, the more difficult it becomes for people to afford renting a place is the only option to stay in a city. Development of low-cost housing units within the city, on government land or in Peri-urban schemes is the best solution to minimize the gap. These schemes are usually launched by governments to subsidize housing and make home financing within the reach of low-income people and offer them a chance to build a home of their own. Again, these low-cost housing units can only be effective if they are well planned, save space and provide quality.

Population Growth
World population is growing exponentially and efficient usage of resources is the only way forward. This also applies to the construction and housing industry because, in the next few years, there will be more people searching for residential units. Most affected parts of the countries due to growth in population are big cities because that is where facilities and opportunities are perceived to be present.

These causes cannot be neutralized in a single day. These are part of the chain reaction and can be handled with time, change of policies and taking other measures. Low-cost housing such as the Naya Pakistan Housing Programme and the development of Peri-urban societies at easy instalment plans can be launched by the government and through public-private partnerships. Moreover, instead of building huge and luxury residences, the focus should be switched to small, quality and efficient constructions. Moreover, living in rural areas needs to be made more attractive by providing facilities, jobs and other opportunities. This will take some burden off bigger cities and encourage expanding smaller cities. Population control is also a major factor that will help curb the housing crisis.


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