Housing finance means, the expected expenditure provided to individuals for the purchase of a residential house / apartment / land.
The loans availed for the purpose of making/ improvements of house / apartment / land shall also fall under this category. “Roti, Kapra aur Makaan” – The slogan mostly underscores the fact that the housing is one of the most fundamental needs – as every family requires roof of its own. It is of course as natural as food and clothing.
According to the Population and Housing Census of Pakistan, in the year 1998 there were over 19. 3 million Housing Units in the whole country.With the population of 149 million by the end of June, 2003, the housing unit requirement on the basis of the World Bank’s recommendation at the occupancy rate of 6 persons per house and the total number of Housing Units required in the country should be around 24. 8 million. The above formula shows that there is shortfall of over 5. 0 million Housing Units.
It is immensely important to note here that earth quake which destroyed Balakot, Azad Kashmir and the adjoining areas, and which according to latest reports took the lives of more than 57000, has increased up to a great extent the number of residential units, required by Pakistanis.The demand for housing finance in the country is enormous and there is a acute shortage of housing units in the country. There is dire need to invest in housing-building sector and fetch direct foreign investment in Pakistan. Pakistan faces acute shortage of housing in which almost 85 per cent people do not have their own houses.
Pakistan is facing a backlog of 2. 7 million houses and every year 0. 5 million new abodes are needed to meet the growing demand of houses. Rs70 billion annual investment is required to construct 0. 5 million houses.
All the provinces had been asked to identify 100 acres land for low-cost housing projects to accommodate majority of homeless people. Laws related to housing and land were being amended to remove bottlenecks in launching low-cost housing units in the country, which need six million houses and each year this demand increases from 0. 3 to 0.
4 million. In the present circumstances, incentives announced for construction and housing industry in the 2004-2005 budgets, are unlikely to boost up the construction and housing activities, in the countryFortunately, the general conditions in the country are quite conducive to achieving a rapid growth in the housing industry. The country is witnessing stable macroeconomic environment and a foundation has been laid for sustained high growth in the medium term.
However, one major area that has lagged behind is the housing finance, a critical input required for the promotion of housing industry. The lowest allocation to housing finance in Pakistan as per the above list does not represent any lack of demand.Instead it shows lack of a properly organized approach to housing finance sector in the country. Moreover, either rather high interest rates, or somewhat lack of competition in the financial organization also, affects the rapid growth of housing finance sector in the country.
The economic growth of a developing nation depends upon the role played by the financial institutions. Banks are very important institution in this case. Now a days in our country in the housing sector there is intense competition amongst the banks.To meet with the demands of the day the banks now a days possess sophisticated technology for the convince of their customers and to attract new customers through incentives and introducing new schemes.
Moreover banks are very much acquainted with day-to-day challenges due to the cut throat competition in housing sector . This healthy competition would lead to the composite development of the housing sector. Nowadays number of reforms has been introduced in economy in general and the housing sector in particular.