Currently, Pakistan is facing a shortage of around 12 million housing units as demand for homes remains high compared to supply (Express Tribune, 2022). A lack of financing options also restrains people from owning homes as paying the upfront cost of the house is very difficult for the average person.
There is a high need for affordable and accessible housing in Pakistan. To fulfil the housing demand and supply gap, particularly for low-income households, efforts must be made by the government to introduce housing finance programs, land management system enhancement programs, an affordable housing programs.
Private sector banks must provide access to mortgage loans for those who currently cannot access financing to buy a home by streamlining the process of obtaining such loans. The process will also strengthen property rights and increase the supply of affordable housing developments.
To increase the availability of housing units, the World Bank and Pakistan have signed an agreement for the Pakistan Housing Finance Project worth $85 million to increase access to housing finance for households and support capital market development in the country.
The project will provide access to affordable mortgages to increase homeownership among low-income households, including women and informal workers. It will support the capital market development by scaling up the credit risk-sharing facility to provide partial credit guarantees to banks to incentivise them to lend to borrowers. This will benefit up to 70,000 first-time homebuyers in the country who qualify for the Government’s interest rate subsidy program – Mera Pakistan, Mera Ghar.
The program will further enhance government systems to create an enabling environment to attract private financing for mixed-income housing developments. It will also incentivise the integration of green building principles, climate resilience, accessibility, safety, and mobility of women in housing developments.
Pakistan has been a member of the World Bank since 1950. Since then, the World Bank has provided $40 billion in assistance. However, in the current portfolio, there are 58 development projects with a total commitment of $13.8 billion. The Country Partnership Strategy governs the World Bank’s program in Pakistan for FY2015-2020 with four priority areas of engagement: energy, private sector development, inclusion, and service delivery.
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