PAKISTAN – HOUSING DEMAND IN ISLAMABAD CAPITAL TERRITORY

The presentation is a comprehensive analysis of the housing sector in Islamabad, focusing on the factors influencing housing demand, current challenges, and policy recommendations to address the housing shortfall.

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Introduction

Housing demand in Islamabad is shaped by several key factors:​

• Population Growth: An increasing population directly escalates the need for housing units.​

• Employment Opportunities: The availability of jobs attracts individuals to the city, influencing housing demand.​

• Infrastructure Quality: Well-developed infrastructure enhances the city's appeal for potential residents.​

• Educational and Health Facilities: Access to quality education and healthcare services makes a city more desirable.​goldcrestviews.org+1Affordable Settlements Center+1

• Housing Costs: Affordable housing options are crucial in meeting the needs of various income groups.​

Policies Influencing the Housing Sector

Several policies impact the housing sector in Islamabad:​

• Infrastructure Provision: Development of roads, utilities, and other essential services supports housing projects.​

• Land and Housing Development Regulations: Policies governing land use and construction standards affect housing availability and quality.​

• Construction and Materials Industry Organization: The structure and efficiency of the construction industry influence housing supply.​goldcrestviews.org

• Public Sector Involvement: Government initiatives and investments play a role in housing development.​Affordable Settlements Center+2Pakistan Observer+2The News International+2

• Informal Housing Units: The prevalence of informal settlements impacts the overall housing landscape.​

Literature Review

The presentation references various studies:​

• Smith, Rosen, and Fallis (1988): Highlighted the unique nature of housing as a heterogeneous good with location-specific attributes.​Affordable Settlements Center

• Maclean (1994): Emphasized the imperfect substitutability of housing across different locations.​

• Zaki (1981): Reviewed housing conditions in Pakistan from 1960 to 1980, noting issues of congestion and low quality.​

• Pasha and Ghaus (1990): Analyzed trends indicating significant improvements in housing conditions over time.​

• Nazli and Malik (2003): Discussed housing as a critical component of poverty alleviation strategies.​

Housing Sector in Pakistan

According to the National Housing Authority:​

• Housing Stock: Approximately 19.3 million units, with 32.3% in urban areas and 67.7% in rural regions.​

• Housing Types: 21% pacca (permanent), 40% semi-pacca, and 39% kutcha (temporary) structures.​

• Household Size: An average of 6.6 persons per house.​

• Occupancy Rate: 3.3 persons per room.​

• Housing Shortfall: A deficit of 4.3 million units, with an annual requirement of 570,000 units but a production of only 300,000 units, leading to a recurring annual shortfall of 270,000 units.​

Housing Finance in Pakistan

Arshad (2003) noted that the House Building Finance Corporation (HBFC) predominantly provided loans to upper and upper-middle-income groups, with only 23% allocated to lower and lower-middle-income groups. The State Bank of Pakistan has been promoting housing finance by encouraging commercial banks through concessional re-financing rates and relaxing the debt-equity permissible ratio to 80:20, increasing the maximum borrowing limit to Rs. 7.5 million.​Affordable Settlements Center

National Housing Policy

The policy addresses core issues related to:​

• Land Matters: Streamlining land acquisition and development processes.​

• Housing Finance: Enhancing access to affordable financing options.​

• Construction and Services Sector: Improving standards and efficiency in construction practices.​

• Low-Cost and Rural Housing: Focusing on affordable housing solutions for low-income and rural populations.​

• Building Materials and Infrastructure Development: Ensuring quality and availability of construction materials and infrastructure.​

• Building and Zoning Regulations: Implementing effective regulations to guide urban development.​goldcrestviews.org

• Institutional Framework: Establishing robust institutions to oversee housing sector development.​

Islamabad City Overview

Established in 1959, Islamabad spans a total area of 906.0 sq. km, comprising 440.3 sq. km of municipal area and 465.7 sq. km of rural area.​

Demographic Characteristics

The city's population has been growing, leading to increased demand for housing.​

Housing Sector in Islamabad

The city's housing profile includes approximately 75,000 existing units in various sectors, with a demand for 125,000 units, resulting in a shortage of 50,000 units. Additionally, there is an annual demand for 4,000 new units.​

Level of Congestion

High occupancy rates indicate significant congestion in existing housing units.​

Nature of Tenure

The tenure distribution in Islamabad includes both ownership and rental arrangements, with variations across different sectors.​

Sectoral Allocation of Housing Units

The allocation includes:​

• Residential: Not more than 55%​

• Open/Green Spaces/Parks: Not more than 8%​

• Roads/Streets: Not less than 26%​

• Graveyards: Not less than 2%​

• Commercial and Parking: Not less than 5%​

• Public Buildings: Not less than

Housing differs from the standard Neoclassical good; it is heterogeneous and its spatial fixity means that the location of the housing stock matters to households. Promoting the Concept of Housing Finance. Encouraging the commercial banks by re-financing them at concessional rates. SBP has relaxed the debt-equity permissible ratio up to 80:20. while enhancing the maximum borrowing limit to Rs. 7.5 Million. Alse Read; HOUSING DEMAND ACROSS INCOME GROUPS IN PAKISTAN