Solving Pakistan's housing crisis: Taking Singapore as a case-study

[Salahuddin Ayyubi]

I'm not an expert in housing management or infrastructure. So I would like the experts on this forum to give an insight into how the Singaporean model can work in Pakistan.

Thanks.

 

[Yankee-stani]

@Nilgiri has lived in Singapore for a while he could tell of the experience done there

 

[Nilgiri]

@Nilgiri has lived in Singapore for a while he could tell of the experience done there

The first step is to have a very competent govt with a very good vision to carry out long term projects that have huge social benefit like this HDB housing (and crucially integrating it with good economic+human resource focused policy to provide the means for it soundly).

So there is only some application to South Asia (given our govt quality) I am afraid, as there can be more harm done than good given the corruption etc. It really helps Singapore is a city state....no place for a govt goon to flee to somewhere else in country after mucking things around etc....you are always under the limelight and pressure basically.

One thing Singapore smartly did was a mandatory savings program (CPF) for example (that both the worker and company pay into 50/50 at certain % of income). This can be used for things like housing, health, retirement.

This means there is no weird unfunded liability ramp like you get in lot of other developed countries (as new govts promise and add more and more but dont keep up on revenue supply for it and keep kicking that can)...and it also guarantees solidy the payback of initial subsidy the govt uses to make cheap but quality compact apartment housing (en masse esp during the 60s, 70s and 80s for singapore and now it just tops off as needed with newer designs when new housing demand comes in). It must be said though Singapore benefited a lot from availability of cheap labour from other countries for construction projects.

I haven't watched the videos posted here yet, but I would imagine it runs along the same vein of strong but smart (well run) govt intervention....but not going totalitarian on it (given there is private housing like condominiums for those with more wealth to participate in within reason...i.e cant speculate/buy+leave empty etc coz generally 1 family/person can only own 1 accomodation).

@Mista and @waz also might have more input to add.

 

[Xeson]

Hello there, a very good discussion topic if dealt in right way.

First, I would suggest to change title to "Solving Pakistan's housing crisis: Taking Singapore as a case-study". That would remove any unwanted political affiliations and rather focus on the issue at hand.

Coming to the topic, housing shortage and construction Industry both are intervened very strongly together and to our social values as well as economic development.

For fruitful discussion, the following questions and study are pre-requisite so I will start by laying them out first for anyone and everyone that is interested.


Question one: What is the current condition of housing in Pakistan?
Question two: Whenever it comes to housing the most important outstanding problem is that of “affordability”.

Answers: The following two-part study (March, 2019) provides a well-crafted look into both the questions. I personally agree with most of the data, analysis and conclusions.


The Precarious Housing Situation in Pakistan
By Hina Shaikh
https://pakistangrowthstory.org/2019/03/20/the-precarious-housing-situation-in-pakistan/


The Case of Affordable Housing
By Kamil Khan Mumtaz & Hina Shaikh
https://pakistangrowthstory.org/2019/03/28/the-case-of-affordable-housing/

Note: Mr. Kamil Khan Mumtaz is a legendary and renowned architect of our country (I would suggest searching him out and getting to know his work) while Hina Shaikh is an economist.


Highlights (if unfortunately, you didn’t go through above links):
While I am laying highlights [with explanation for understanding of terms in brackets] from both the blogs here, please do read the detailed blogs for better understanding.


Current Condition of housing:

“With the highest rate of urbanisation in South Asia, access to affordable housing has become a key issue for Pakistan’s lower and middle classes.”

“The explosion in population and urbanization has left a growing number of people without access to decent, stable housing. The last census in 2017 confirms the housing stock is now 32.2 million of which 39% is urban. The urban population is expected to grow by 2.3 million per year over the next 20 years, which translates to 360,000 households at 6.3 individuals per households. Ownership remains concentrated in the top income bracket leaving a limited supply of housing for low-income households. Shelter insecurity at the bottom income strata and lack of affordable housing has thus become a compelling public policy issue.”

“The sixth Housing and Population Census (2017) confirms Pakistan is now the seventh most populous country in the world. Its overall population is growing at 2.4%, while urban population growth is even higher at 2.7%. More than half of Pakistanis will be living in urban areas between 2030 and 2040. This rapid population growth is causing an overall housing shortage, currently estimated at close to 10 million units. Whereas, the annual urban housing gap is between 3.5 and 4 million units, mostly (62%) amongst the economically weaker segments of the population. In Punjab alone the Urban Unit has estimated a housing shortfall of 2.3 million units. The situation may worsen as household size shrinks, leading to potentially higher demand even with the same population.”

“An important aspect of the housing gap is affordability”


Affordability of Housing in Pakistan:

“There is not much clarity on precisely what is affordable by the consumer, in this case the average Pakistani household. Globally, housing is defined as affordable if a basic housing unit, which provides a minimum amount of personal space (anywhere from 250 to 500 square feet) and amenities, is accessible at 20% to 40% of gross monthly household income for either rent or mortgage.”

“According to the Household Integrated Economic Survey (HIES) 2015-16, the average Pakistani household of 6.3 persons, has a monthly income of PKR 29,150. This comes out to be almost half the internationally accepted poverty level of USD 2 per capita per day, which comes to PKR 57,790 per average Pakistani household per month, and even lower than the subsistence level of USD 1.4 per capita per day, or PKR 39,753 per household per month.”

“A household can afford a total outlay on housing not exceeding 2.7 times its annual income, as derived from financial analysis of House Building Finance Company loan conditions, which are more favorable than bank loans.”

“Greenfield developments [this means developing new houses on land that is not previously used for any human activity] are not an affordable housing option for the average Pakistani household. Infill [refers to the development of vacant parcels within previously built areas] developments with high density multi-storied apartments, in existing cities, may be the only affordable housing option for urban populations. Infill development in existing rural settlements remains most affordable housing option, with the added advantage that increased land area per person, would facilitate production-based livelihood opportunities in organic farming, artisanal manufacture, forestry and animal husbandry.”

“Secondly, the role of subsidies as a solution to providing low-cost housing needs to be qualified. Somebody has to pay the actual price.”

“Thirdly, while densification of existing low-density urban areas has to be a part of the solution, terms such as ‘High Rise’, and ‘Vertical’ development need to be qualified. ‘High Rise’ normally means more than twenty stories. It implies very high costs of construction using high-tech materials, construction technologies and systems such as lifts, air-conditioning, etc. with a high load on the urban utility infrastructure on high valued land. This game of mega-structures and mega-bucks can only be played by big corporate entities: financiers, developers, consultants, builders, who all make super profits, but the money leaves the local economy. By contrast, low-rise, low-tech, high-density would be two or three, maximum five stories, implying lower costs and walk-up structures that can be built by small local builders. So, the money spent remains in the local economy.”

Having laid the foundations of a worthy discussion, now we may come to the possible solutions, better and not so better solutions, cons and pros of each solution and a comparative analysis of the case of Singapore and Pakistan.
Here is my input:
1- Low to mid rise developments (Ground+3 story mainly up to 8 story for specifics) may hold the key to possibly affordable yet sustainable housing development
2- In our culture/country, a house is not only shelter but a generational institute, property and unit of social and economic security while house ownership in itself is an esteem, social value and investment. So lease does not look like an option that people would take. Ownership with installment payments is the way.
3- With dire economic conditions, public-private partnership may possibly be the most appropriate option.
4- The architectural design of the units/buildings/development would be death and life, catering to the very culture specifics of our societal norms (example privacy, concept of family and joint family)
5- The idea of basing ownership of certain property of specific value and minimum occupancy for resale is very important to hold balance. It helps in data acquisition of incomes as well as taxation of income and property.
6- In social housing,a nice concept, community spaces like shops, mosque, multipurpose hall for ceremonies e.g. marriage, death, community meeting etc not only integrates community but are owned by govt or developer that also generates income for running and maintenance.
7- Nothing works without, check and balance. A proper set up to look after continuously.

Hope this makes it going in the right direction. I will add up any if I find further along.
Best,
Xeson

 

[Mista]

In Singapore, there's a separation of housing market between the middle-class and the rich. If you just want a roof over your head, you go for HDBs. If you want to invest, speculate, the luxury, the class, you go for private housing.

Therefore unlike most other countries where the rich disproportionately participate in the mass housing market, the rich here don't or can't push up the demand and distort housing prices for the majority of the population as the markets are separated.

For example in most countries a multi-millionaire can easily own 10 or even 20 properties, artificially pushing up the demand and pricing out the middle-class which then have to rent from them for some good years. This doesn't happen in Singapore; a married couple, rich or poor, is limited to only 1 HDB. You want more, you go to the private property market.

Also, under the constitution the government isn't allowed to spend money raised from land sales, they go straight into the reserves and can't be spend. Thus there's lesser vested interest in seeing high property prices as the government's spending isn't affected by land sales.

If the government wants to raise spending, they have to raise taxes. There's no convenient way of raising revenue indirectly through higher property prices.