Affordable housing

30 Jun 2020

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THE World Bank will support the Punjab government develop a housing policy to improve access to affordable housing for low-income groups as part of the province’s broader post Covid-19 economic recovery effort. Although provision of low-cost homes has been the cornerstone of the PTI’s election manifesto, housing and infrastructure development have acquired greater importance in the wake of an economic recession as the revival of construction activity, once the pandemic subsides, can help drive growth in 40 or so connected industries. According to some estimates, the construction of 100,000 housing units in the country can increase GDP by around 2pc. Additionally, the construction industry is the largest employer of skilled and unskilled workers after agriculture. Thus, promotion of a sustainable housing supply will help mitigate risks like climate change, public health and inadequate infrastructure investment arising from unplanned urban expansion. The project can help the province find housing solutions to address barriers on the supply and demand side of the housing value chain, and serve as a model for other provinces.

Increasing supply of affordable housing for low- to middle-income groups has been on top of the agenda of almost every political party since the 1970s. Successive governments — both federal and provincial — have not only invested in public housing schemes but also have, from time to time, given policy and fiscal incentives to attract private capital to low-cost housing. Nevertheless, housing shortages in the country have grown and are now estimated to have reached 10m units. The PTI has promised to build 5m housing units in its five-year term but is sure to miss the target with zero houses built so far. However, the government expects the incentives it announced as part of a construction package will kick-start building activity in general and woo private investment in housing for low- to middle-income people in particular. To encourage investment in low-cost housing, the government has also set aside Rs30bn as subsidy in its budget. Additionally, the provinces have given several tax concessions to builders and developers. But these measures are unlikely to work unless a longer-term multipronged strategy, which targets private investments in affordable, low-cost housing solutions for different income groups, is evolved. That will not only require restructuring of the incentive package but also entail federal, provincial and local agencies implementing measures across the entire housing value chain from access to land with basic infrastructure to planning and building regulations, and construction and mortgage finance.

Published in Dawn, June 30th, 2020