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Is there a housing crisis in Pakistan? If you ask Dr Nadeem ul Haque, the former deputy chairman of the Planning Commission of Pakistan, there is no crisis – no, really. In comments to Profit, Dr Haque believed that because he personally had never seen any homeless people in the streets of Pakistan at night that meant there was no housing backlog or deficit. 

What Dr Haque believes as an individual is entirely his prerogative, but the fact that he previously headed the planning commission of our country is concerning. Because this kind of attitude prevalent in our government  – that housing is not a crisis that Pakistan has to pay attention to – is exactly what has led to delays in the country’s housing policies. Consider: the federal government promises to provide housing under Article 38 of the constitution, and yet the government published its first housing policy decades later, in 2001. 

The truth is, for a country with the highest rate of urbanization in South Asia, that was recently hit with devastating flooding that destroyed over two million homes, the housing crisis is most definitely a problem. Is the state paying attention, and does it have the resources to provide solutions?

Capturing the crisis

To understand Pakistan’s housing crisis one must keep in mind three variables: scale, demand, and cost.

First, the scale of the problem: In 2020, the State Bank of Pakistan published a report estimating Pakistan’s total housing deficit to be 10.3 million units. According to the report, Pakistan’s urban housing shortage was 3.4 million housing units, while rural housing shortage was over 7 million housing units. 

The data on the country’s total population as well as urban population growth rate strongly suggests that these numbers may have exponentially increased in the last three years.

With Pakistan’s population size estimated to increase to 250 million by 2025 and for the urban population to entail 50% of the total population by 2040, the demand for housing is expected to increase from 1.07 million housing units per year in 2020 to 1.24 million housing units per year in 2025. 

Second, who is behind the demand? In 2018, the census calculated that around 62% of the demand for urban housing was associated with lower-income groups. This is pertinent, because it removes the idea  “People should just build their houses” from the conversation, and makes a specific case for government intervention. Average households in Pakistan’s poorest population quintiles each earned an average monthly income of Rs 24,365 and Rs 30,210 in 2018-2019. Even without accounting for the increase in minimum wage or the average price of building material, it would be fair to assume that the cost of building even a low-cost five marla greenfield home is higher than the average propensity to save for lower-income groups in Pakistan. 

Third, what is the economic support required to overcome the crisis? In their working paper for the International Institute for Environment and Development, Arif Hasan and Hamza Arif calculated that in order to restrict the housing deficit to current rates, Rs 100 billion is required to be dedicated annually over the next decade towards low-cost housing units. At a mere Rs. 2.33 billion, the 2020 budget allocation for housing, however, was Rs 97.6 billion less than this required amount.  What widens this gap more is rising inflation and declining income per capita, further lessening the probability that the deficit can be conquered by just creating new low-income housing units. 

Who’s in charge?

It is not enough to delineate the country’s housing crisis. The issue is that there is no central authority that is in charge of handling the issue. Consider the case of a developed economy, like the United States of America. It has exactly one department, the U.S. Department of Housing and Urban Development (HUD), which designates affordable housing to people and provides housing loans. 

That is not the case in a developing country like Pakistan. Housing in Pakistan is a severely decentralized domain with departments set up at a federal, provincial, and even municipal level. The Planning Commission of Pakistan, for instance, is a financial and public policy development institution of the Government of Pakistan which falls under the jurisdiction of the Ministry of Planning, Development and Reforms. The Planning Commission carries out research studies as well as state policy development initiatives for the growth of the national economy and public and state infrastructure. 

The Planning Commission also publishes the Public Sector Development Programme (PSDP), a document revealing the federal budget for each ministry related to development, including the Ministry of Housing and Works (MHW). The Ministry of Housing and Works is therefore responsible for implementing the policies framed by the State related to the “Housing Sector”, as is expressed on their website. 

The MHW is further divided into six departments, namely the Pakistan Housing Authority Foundation (PHA-Foundation), the Federal Government Employees Housing Authority (FGEHA), the Pakistan Public Works Department (PWD) and so on. Out of the six, only PHA-Foundation is “consistently striving to eliminate shelterlessness and to reduce the housing shortfall in Pakistan”, as is stated on their website.

However, this is not the end of government departments dedicated to resolving the housing crisis. The Punjab Housing and Town Planning Agency (PHATA) was created to  mitigate shelter-less low income groups in Punjab as well as to rejuvenate the province’s housing sector. PHATA is a subdivision of The Housing and Urban Development (HUD) and Public Health Engineering (PHE) Department. In Sindh, the Human Settlement Authority works towards providing low cost and affordable housing as does the Sindh Cooperative Housing Authority. 

If you are having trouble keeping track, please note we have not even mentioned the Provincial Housing Authority in KyberPakhtunkhwa, the Special Development Board for Low Cost Housing and the Communication, Works, Physical Planning & Housing Department in Balochistan, or even local development authorities like the Government of Punjab’s Lahore Development Authority.

What this cobweb depicts is that while the responsibility of housing is explicitly with the state, the overlapping jurisdictions make it impossible to highlight one specific department as the accountable governing body. This further leads to scattered mandates and therefore the inability to reach any policy goals at a national level.  

Regularisation 

The state has two avenues at its disposal: regularizing informal settlements and increasing the state budget towards low-income housing. Let’s tackle the first one. 

There is a common misconception which equates a housing crisis with a crisis of complete homelessness. The UN-Habitat report of 2018 revealed that around 50% of Pakistan’s urban population lives in informal settlements or katchi abadis. This is perhaps why many people, including Dr. Haque, do not see any “homeless people” sleeping in the streets of their cities. 

However, this does not mean that a large proportion of this 50% do not require adequate housing. The state of Pakistan’s katchi abadis are predominantly unsanitary, unsafe, and extremely overcrowded.  To say Pakistan is facing a housing backlog does not mean that people have absolutely no form of shelter, but rather urges for an improvement of substandard shelter that is inadequate to their right to living a dignified life. 

Seeing the sheer impact that informal settlements have on curbing urban homelessness and providing an alternative to low-income housing, the provincial governments have each over the years introduced the Katchi Abadi Acts which protect these settlements from arbitrary eviction, but also move them towards regularization. For instance, Sindh passed the Katchi Abadsi Act in 1987, Punjab in 1992, and Khyber Pakhtunkwha in 1996. 

To be regularized by the state is not only a form of legitimacy but also improves access to other amenities and services, such as gas and electricity. Yet, there is still a long way to go as a 2022 UN Habitat report revealed only 562 informal settlements in Karachi are regularized, while 424 remain unregularised and without any security of tenure. In a 2020 UNICEF report, it was estimated that 36% of all Katchi Abadis are still unregistered and therefore illegal. 

It is pertinent to note here that these figures do not always go unnoticed by state institutions. In 2015, for instance, owing to the growing predicament of homelessness, the Supreme Court sought proposals for ensuring provision of shelter to the homeless people in the federal capital. 

The PSDP budget 

Another more institutionalized avenue at the state’s disposal is through the Public Sector Development Programme (PSDP). The PSDP is essentially the federal budget for development published by the Planning Commission which reveals the resource allocation for each development scheme and division for that year. It is a relevant read precisely because it explains what amount of money the government plans on spending on various ministries, such as the climate change division, human rights division, and the housing & works division. 

This year’s PSDP was released in early June when the National Economic Council (NEC) approved Pakistan’s highest Federal Public Sector Development Programme (PSDP) of Rs. 1150 billion for fiscal year 2023-2024. Separate from this allocation, the NEC also approved a Rs. 200 billion allocation to Private Participation in Infrastructure Projects and Built-Operate-Transfer project investments which are projects that involve a public-private partnership and are output focused. 

This is the extent of information provided in the PSDP document. Little to no clarifications on how this money will be used or where it will be specifically directed towards is available. Moreover, when Profit interviewed five different officials, each at different levels of seniority at the Planning Commission and Housing & Works department, they all redirected us towards the website, stating that as government officials they were unable to provide any insights to the media outside their official media portal.  

Unfortunately, similar to the fate of many other government projects, upon closer inspection, the PSDP is quick to lose its glimmer. And if this close inspection is directed specifically towards the provision of funds for Housing & Works, the inadequacies become even more apparent. 

Let’s break this down. One of the main reasons why the government allocated funds of Rs. 40,600 million to the Housing & Works division in the PSDP can not solve the problem is because contrary to popular belief, the department is not set up to solely provide low income housing or any housing at all to regular citizens. 

In actuality, as stated before, the Housing & Works division is further divided into six departments, only one of which, the PHA-Foundation, provides low cost housing units to low and middle income groups of Pakistan on ownership basis. This means two things: first, the 40,600 million Rupee budget to the Housing & Works division is not synonymous to the amount allocated in the provision of low income housing or shelter to Pakistanis, and second, since the PHA-Foundation provides housing on an ownership basis, this means that the PSDP funds only reach certain economic groups in the country. 

Speculative low income housing

Here’s an unexpected twist in the country’s housing crisis: the speculative real estate market. In an interview with Profit, a former officer at the Board of Revenue turned urban planner highlighted the increasing trend of treating residential plots and land as speculative investments. This refers to the widespread practice of purchasing land with the intention of selling it once its value increases over a long period of time, as a means of wealth development. This is true and observable across all socio-economic groups, where higher income groups purchase more expensive and large areas of land, whereas lower income groups will purchase five marla plots and not carry out any construction for many years. 

According to the urban planner, even many recipients of low income housing schemes, prefer to either turn their housing units into income streams by finding tenants or to wait for the value of their land to increase in order to sell it off later for a high profit. 

In all these cases, no new houses are built and people continue to live in their original conditions, which solves no problems. On the contrary, the solidification of this disinterest in building houses as a social practice has proved to be distortionary for Pakistan’s rent and financial markets. 

Resultantly, the urban planner said, “State programs that provide housing require a broad oversight mechanism that should tackle two things: firstly, ensure that each eligible family or household only receives one housing unit and secondly, that these housing units or plots are not thrown into the speculative market.” 

But before getting to housing mechanism, the state has to first provide houses to begin. Indeed, the state’s role in providing houses involves multiple variables, both formal and informal. It has become integral now for the state to recognize that they must coordinate and regulate both in their national housing policies. This would require an accelerated approach to regularizing Katchi Abadis under the provincial katchi abadi acts, alongside the provision of constructed low income houses to the income groups most susceptible to experiencing homelessness or debilitating living conditions. 

Additionally, as alluded to before, greater regulation of the housing market must be provided to ensure that residential land is used for its designated purpose, which is to house the owners and not to be used as a tool for wealth generation.