In 2015, SBP estimated the housing shortage at above 9 million units. Assuming a 'habitation density' of seven persons per unit for a population of 200 million the demand works out to around 30 million units. If the SBP figures are to be trusted this means one out of three households does not own a home. With each passing year, it is getting worse.
There are other disturbing statistics too. A Lahore housing survey (2012) found the bottom 68% owned only 1%, while the top 12% gobbled up more than half of available housing - a hurtful paradox of plenty (for the affluent) and paucity(for the poor). Another paradox: while informal settlements house 62% of Karachi's population, there are 300,000 fully developed plots and 68,000 apartments lying vacant in the city. Then there is the housing finance to GDP ratio: Pakistan's less than one percent, compared to India's 7% and OECD average of 50%.
Makan is clearly beyond the reach of the low-incomed. If you have a household income of 20,000 a month, which is above the norm, the best that you can afford (provided you can raise the loan) is a house costing 500,000 rupees. We did our research, and even in the lowliest of Katchi Abadis, three bus changes away, you can't get anything for less than four times. As things stand there is little hope for the low-incomed.
But what about those up the ladder, the middle classes?
Let's do a back-of-the-envelope affordability check. To own a house costing Rs 2.5 million (against a ten-year loan @ 10% per annum mark-up) one will need Rs 27,000 per month to service the loan. This pretty much rules out all except those earning around 100,000 per month (one-third of gross take home going to loan instalments); and if you are earning that much would you want a basic two-room contraption in a far-flung area that a 2.5 million house gets you? 'Safaid poshi' gets in the way.
Now consider the plight of a bright young person out of IBA, who has a good job with an established firm drawing a monthly salary of Rs 200,000 per month. His new found status obliges him to live in a decent area, with good private schools and a short drive to work. Home prices in such areas start at five crores. Do your arithmetic. There is no way the young person can aspire to a home in a convenient neighbourhood on his salary.
It is not that the government has been completely apathetic. There have been initiatives aplenty - from Korangi to Apnibasti to Meraghar to 5 Marla to Ashiana. All were destined to fail, even before the ink dried. Each had serious design defects -and none bold enough. Now the Punjab CM is looking to the Turkish (TOKI) for expertise while the academics pore over the Canadian developer Mike Labbe's 'option' model that makes speculation more controllable.
The principal villains are the developers and the government.
The developers' business model is built around speculation. That's how fortunes are made; that's why Pakistan's major cities perhaps have more estate agent offices per square mile than anywhere else; that's where informal economy gets a boost. Even if the government is not actually in cahoots with the real estate mafia it ends up promoting their agenda. Complicit or incompetent, the government is no friend of low cost housing.
First, zoning laws and building controls favour low density, which is anti-low cost housing. To put it in perspective, Manhattan's population density is five times that of Lahore - despite which many in Gulberg will happily trade their manicured lawns for a Manhattan condo.
Second, the government slumbers while the mafia encroaches upon state land, only to wake up after the mafia has done its job -land parcels sold off to the unsuspecting - and gone. The demolition squads then move in to evict the poor suckers. Third, through an invidious protection policy government has jacked up the prices of construction materials - steel, cement, paints, tiles, sanitary ware - up to three times the world prices. Also, the entrenched interests of these industries discourage the use of alternative technologies that are more efficient and cost effective.
Fourth, scarce utilities find a way to the posh localities. If the katchi abadis get the connections you can be sure the mafia has extracted a price that does not end up where it belongs. Fifth, there is no mortgage finance for the really needy. No matter what scheme comes up they will never qualify - neither enough regular income nor the collateral.
Finally, it is the land. Somehow, there is always enough for the Defence Authorities, Bahria towns, and all those 'schemes' sponsored by one set of civil servants or other. There is never a God's little acre for the wretched of the earth. All eyes are across the border. Will Modi swing his ambitious 'housing for all' project creating 20 million units by 2022 at a cost of $2 trillion? If he does he would have created his legacy, and sent a powerful message to our leadership that low cost housing is good politics, and that it is never about means but about will.
If our leadership does not wake up to the housing MOAB - mother of all bombs - it risks the NAB slogan reading 'say yes to corruption'. It risks the fungus of hovels creeping up to their palaces. It risks establishing itself as 'an artist of the floating world', not a leader of people. Makan, makan, aur makan. Like Pirandello's six characters in search of an author these four words are hanging out there - waiting for political adoption.
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Copyright Business Recorder, 2017