The Naya Pakistan Housing Policy: An Economic Analysis

Abstract

Affordable housing is a common concern in developed and developing countries alike. In Pakistan, where the housing demand backlog is an astonishing 10 million units, housing shortage is a function of both quantity and affordability. To tackle the situation, in 2018 the government of Pakistan introduced the Naya Pakistan Housing Project with the stated aim to increase housing for the poor. This paper uses microeconomic theory to gauge the impact of two specific provisions proposed to be implemented under the Naya Pakistan Housing Project: allocation of public land for low-cost housing and promotion of low-income housing finance. It is argued that although theoretically, both provisions will not produce any dead-weight loss in the housing market and will result in increased consumption of housing, it is unclear whether they provide housing to the particularly needy segments of the population for which they were intended. It is recommended that further provisions are made to ensure that low-income borrowers are prioritized and protected from rent-seeking speculative buyers who are better positioned to take advantage of the Naya Pakistan Housing Project. The paper also recommends that Benazir Income Support Programmer’s registry be used to disburse credit to needy segments.