KARACHI, Dec 26: While millions are homeless in the country, house rent index has been on rise since May this year, clearly reflecting the terrible pressure on the people already under the strain of crushing food inflation of 14 per cent.

The ‘inflation monitor’ issued by the State Bank on Wednesday talks about the house rent index, but does not carry figures of the homeless in the country. However, it said the house rent kept on moving upward.

“The house rent index (HRI) sub-group maintained its rising trend that started in May 2007 and depicted a higher (year-on-year basis) inflation of 8.3 per cent in November 2007, compared to 6.6 per cent in the same month last year,” said the SBP’s Inflation Monitor.

The house rent has the largest share of 23.4 per cent in the non-food basket, reflecting the importance of the sector and its inflationary implications on general people.

During the last three years, the country especially the main cities, witnessed sharp increase in land prices while the construction materials’ price hike further enhanced the gravity of the housing problem.

“Rising wage inflation and higher prices of bricks, iron bars and wires and cables are specifically putting an upward pressure on HRI inflation,” said the SBP report.

Along with the government just out of power, all other governments of 1990s had been raising slogans to move the giant wheel of the housing industry which could move the 42 allied industry but all of them failed to bring a change in the stagnant situation.

“The last three years were the worst as speculative prices took over the charge of the housing sector and pushed out the general public from the market as prices went beyond their buying capacity,” said Saeed Aalam, a builder who claimed that the housing business was declining with its limited focus on a particular segment of society.

Bankers have another view of housing failure. They said the house prices and construction cost, along with the land prices, are so high that lending carries extra precautionary measures. This precaution forces banks to adopt low lending strategy for this sector.

“Only the financial sector can bring a vital change in the housing sector, but the speculators barred them to finance the sector on mass scale,” said a high official of a local private bank.

Islamic Banks are also involved in the housing finance but only few can afford to avail the facility.

An analyst said the rate of both the conventional banks and Islamic Banks were so high that a small house was not affordable for a person of very high income.

“If you buy a house of Rs5 million through bank loan at 12 per cent, you will have to pay Rs600,000 as annual interest on the amount beside the installments of the real amount,” said Aamir Shoib, an analyst.

He said the total annual payment (interest plus installment) could be around Rs1 million to Rs1.3 million which is fairly large for most of the people living in the country.

Land and housing business is either targeting overseas Pakistanis or the business class or people having large surplus of black money.

A state agent, Manzar Iqbal, said his business has gone down to almost zero level as transactions of property reached the lowest level. But he also holds uncertain political condition responsible for the cool in the hottest business.