The present government has stayed away from the ambitious housing schemes of its PTI predecessor. It has not voiced any of the former’s enthusiasm for the housing sector as an engine of growth. That seems a little surprising, for as Punjab CM, the present PM made the Ashiana Housing Scheme one of his government’s signature schemes. However, at the International Affordable, Green and Resilient Housing Conference in Islamabad on Tuesday, Finance Minister Muhammad Aurangzeb shared his thoughts on the subject, making a firm denial of any intention of directed lending by the government, as done previously. Being from a banking background, he identified two problems in increasing the housing stock on the mortgage model, the lack of a regulatory authority, and of an appropriate foreclosure law. Even in their presence, housing financing can cause trouble. It should not be forgotten that during the 2006 US supreme mortgage crisis, there were foreclosures galore, but no one picked the houses, leaving banks to take hit. Also, how far mortgages can go in an economy constitutionally pledged to end interest, is a moot point.
However, it should not be forgotten that Pakistan’s burgeoning population means an ever-increasing demand for new housing. This is the secret of Pakistan’s perennially growing real estate sector. However, the old financing model was heavily tilted towards land prices, to the extent that files for plots, or allotment letters, developed a market of their own, with real estate dealers no longer selling houses or flats or renting them, but selling plots of land that existed only on paper. At times, the speculation in certain plots has become like gambling, or like a bubble. However, now there is a new problem, reflected in the name of the conference at which Mr Aurangzeb spoke. Apart from being affordable, housing must also be green and resilient. This is a new area, but this is because of a new challenge. Making sure that housing can survive the depredations wrought by climate change, such as floods or drought, is an old issue, but it is new for the construction industry to examine whether the manufacture of their materials, or their own processes, contribute to, or subtract from, polluting greenhouse gases. Housing faces a double whammy. Not only is it widely used, but it is also perhaps the most popular investment, and thus the main means of transferring wealth from one generation to another. As such, it cannot be ignored, though, as Mr Aurangzeb pointed out, it has not proved amenable to being ridden over roughshod, as governments have done in the past.
