The global housing crisis is a pressing issue, with approximately 1.6 billion people currently lacking adequate housing, a number expected to rise to 3 billion by 2030. To address this, the world will need to build 96,000 homes daily. This crisis is compounded by the reliance on low-cost construction materials, which are insufficient to meet the growing demand for quality housing.

Here’s a snapshot of the housing crisis and its severe implications for Pakistan:

Global Context: In the UK, plans are underway to build 150,000 homes by 2050 to tackle housing shortages. However, the lack of quality construction materials and affordable housing continues to impact people’s ability to live comfortably.

Pakistan’s Situation:

• Population Growth: Pakistan’s population is projected to reach 250 million by 2025, with urban areas expected to house 50% of this population by 2040. The demand for housing is predicted to rise from 1.07 million units per year in 2020 to 1.24 million units annually by 2025.

• Current Deficit: The World Bank reports a housing shortage of about 10 million units in Pakistan, with half of this deficit in urban areas. Nearly 47% of households live in overcrowded informal settlements.

• Affordability Issues: The Residual Expenditure Method (REM) from the Pakistan Household Integrated Economic Survey 2018-19 reveals that the housing affordability crisis is severe, with the top 12% of earners in Lahore being able to afford 56% of available housing, while the bottom 68% can only afford 1%.

• Urban Deficit: Pakistan faces an annual urban housing deficit of 3.5-4 million units. The challenge is further exacerbated by limited mortgage finance and access to affordable land, with only 0.5% of GDP allocated to the mortgage market.

Economic Impact: The real estate sector's focus on high-end developments traps capital, reducing investment in low-cost housing and limiting overall economic growth. Inadequate regulations and property tax structures also worsen the situation, favoring vacant plots over developed properties.

Key Challenges: The Imarat Institute of Policy Studies highlights the need for low-cost housing and emphasizes that challenges include population growth and the shortage of affordable housing. Effective and inclusive financial policies, as well as improved foreclosure laws, are essential to address these issues.

Conclusion

The housing crisis is a critical issue that requires immediate and long-term solutions. For Pakistan, this means developing inclusive housing policies, increasing the supply of affordable homes, and ensuring that financial systems support the needs of low-income households. Government action and innovative approaches from real estate developers are crucial to mitigating this crisis and providing adequate housing for all.

For more insights into how we can tackle Pakistan’s housing crisis, visit our website: www.themaidaan.com or contact us at (+92) 304-111-3309.

References:

• World Economic Forum (WEF) Report, June, 2024

• Pakistan Household Integrated Economic Survey 2018-19

• Imarat Institute of Policy Studies