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After food, housing is a primary need of every person. There is nothing
that traumatises a psyche than deprivation of these needs. While food
is a consumable item and its costs are distributed continuously over
time, housing is a large investment as one time expense. More over,
as food influences mental and physical health, so does one's abode,
only more so. While effects of eating habits are immediate and obvious,
housing has a subtle and slow but profound influence on people's state
of mind.
Pakistan is blessed with an ecology that naturally produces wholesome
food with relatively little effort - one has to abuse rich, local
cuisine to inflict ill-effects on oneself and that is the privilege
of the affluent few - but the housing situation is in a state of shambles
and degrades quality of life for most people. By 1998 census, 39%
were kuchha houses, 40% semi-pukka houses and 21% pukka houses in
the country. The housing backlog was 4.30 million units. The annual
additional requirement is estimated around 570,000 housing units whereas
the annual production is estimated around 300,000 housing units resulting
in a recurring shortfall of 270,000 housing units annually, taking
the household size as 6.6 persons and the occupancy per room as 3.3
persons, which is the worst, even by regional standards. To make up
the backlog and to meet the shortfall in the next 20 years the overall
housing production has to be raised to 500,000 housing units annually
- a city the size of Multan every year.
Leaving aside the luxury of considering the qualitative aspects of
architectural designs, insulation, ventilation, sanitation and other
environmental factors, the quantitative shortage of housing facilities
has staggering implications on wellbeing of the people on the national
scale. The National Housing Policy approved by the Chief Executive
and President in June 2001 laid out some macro policy measures to
facilitate development of housing sector. It was followed by revision
of credit policy for housing finance by the State Bank in July 2001.
All the focus was on provision of credit and tax relief for individual
house builders. Consequently, only the formal sector has benefited
to a limited extend from these initiatives and helped fuel the heating
up of the land markets (plots) in small pockets of elitist residential
areas of major cities. Drastic reductions in returns on saving schemes
and lower yields on bank deposits have caused massive diversion of
capital to speculative transactions of plots and houses in urban,
elitist areas.
These developments have moved the dream of owning a house further
away for most people. Large Real Estate Developers are creating illusions
of heavenly abodes for the rich and skimming off the wealth that is
a product of privilege rather than productivity. Housing industry
has become an investor's playground rather than a service industry.
Residential property is a bloated asset rather than a utility. If
the bubble bursts, colossal amounts of capital will be lost that could
otherwise have gone into productive investments. Lower and middle
class citizens remain deprived of easy and convenient house ownership,
especially in the rural areas.
For every young family, owning is a house is the top priority of life.
In all developed societies, there are smooth institutional arrangement
for planning, construction, mortgaging of residential houses with
secondary markets for resale and exchange of property. The insecurity
that a dearth of such facility creates manifests in drastically lowered
resistance to temptations of corruption. Moral values erode rapidly
as the compulsion for a 'roof over head' drives officials to exploit
power. The peer pressure and the status symbol of owning a house is
too pervasive for ordinary mortals to resist.
Some agencies, like the armed forces, institutionalize the phenomenon
by arranging provision of cheap plots through official schemes. Individuals
do not have to soil their hands in corrupt practices but the social
equity between services is violated blatantly as other institutions
are unable to provide similar facilities to their cadres. Accumulation
of wealth through such means then leads to avarice that has no end
and distinction between legitimate and illegitimate becomes nebulous.
Wags are saying that the military is planning to introduce 'Real Estate
Management' as part of the basic course at the PMA.
The key elements of an effective housing policy are missing. It should
begin by long term planning of cities and towns according to the particular
demographics of the region. Provision of civic amenities to 50,000
villages in the country is costly and well nigh impossible. It cannot
be left to the whims of MNAs and MPAs as political bribes. Satellite
towns for rural populations need to planned, which are connected to
main cities through fast public transport systems. These satellite
towns need to have all the facilities of urban life. Public-private
partnerships need to be created for development of residential areas
under defined standards. Institutional arrangements have to be created
through legal frameworks between housing developers in the private
sector, financial institutions, buyers and local governments where
each one has a defined role, rights, obligations, performance standards
and incentives. The government can set standards and rules while taking
responsibility for provision of trunk infrastructure (electricity,
gas, communications etc.), developers can build settlements with civic
amenities, banks can provide finance and buyers can take up mortgages.
There was a news item recently that a 'Developer's Package' is on
the anvil with the State Bank that will prescribe rules for financing
housing schemes through private developers under different arrangements.
This would be a very positive step, quite belated actually, for stimulating
growth of housing sector. However, usual pitfalls would need to be
heeded. The formal, organised sector will quickly move in to exploit
the facilities while the most deserving segments - the rural areas
- will remain behind. Some sort of quota allocations will need to
be placed for equity between upper and lower end markets of the housing
sector. The provision of trunk infrastructure will have to be committed
by public sector as part of the package otherwise private developers
may find themselves on the wrong end of the stick that agencies like
WAPDA, PTCL, SNGPL, SSGCL mete out to the public in cost overruns,
delays and red tape.
Housing industry has to be separated from speculators cum investors'
haven and turned into a regulated service utility. Every State owes
this much to its people.
Iqbal Mustafa
email: mustafa@hujra.com
1020 words
13 January 2005
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