Presentation on theme: "Housing and Housing Finance in Pakistan"— Presentation transcript:
1 Housing and Housing Finance in Pakistan State Bank of Pakistan
2 Key Statistics – Housing & Housing Finance Population: More than 170 million,2/3rd rural-1/3rd urbanNumber of persons per room: 3Access to formal finance: 14%Housing Finance to GDP ratio approximately 1%Economic Survey of Pakistan, 2011WB Study-Expanding Housing Finance to the Underserved in South Asia, 2011
3 Key Statistics – Housing & Housing Finance Housing Shortfall = 8 million units, 6 million of which concentrated in lower middle income groupHousing Supply per Year = 0.3 million unitsTotal housing needs = 0.7 million units per yearMajor metropolitans like Karachi are facing high rate of urbanization – Karachi population 16 million plus, of 7-8% pa. Nearly half of Karachi’s population is squatter settlements (around ). Karachi alone needs 100,000 new housing units per year to meet natural growth, cover backlog & urbanization pressureWB Study-Expanding Housing Finance to the Underserved in South Asia, 2011
6 Efforts for Housing in Pakistan National Housing Policy 2001National Housing Authority/Pakistan Housing AuthorityPrime Minister Housing SchemesHouse Building Finance Company LimitedFormation of Housing Advisory Group by SBPInitiatives by Provincial GovernmentsPrivate Sector Initiatives
7 Role of SBP in Promotion of Housing Finance in Pakistan Formation of Housing Advisory GroupImplementation of HAG recommendationsReview of Prudential Regulations for Housing FinancePreparation of Housing Finance GuidelinesDevelopment of a Model for Builders/Developers FinanceCapacity Building of Financial Institution in housing finance through seminars, workshops and training programsDevelopment of secondary mortgage market in Pakistan by creating a Mortgage Refinance Company (MRC)Championing Low-income housing financeInvolving key Stakeholders – ABAD, AMB
8 Housing Advisory Group SBP formulated a Housing Advisory Group (HAG), drawing membership from different stakeholders. Its recommendations are being actively pursued by SBPReforming Legal Framework affecting Foreclosure, Transfer, Tenancy, Rent Control and Credit bureaus etcRationalization of Transaction CostsEstablishing an integrated land registration information systemIncreasing supply of land for affordable housingStructuring and streamlining large scale developer’s financeFacilitate low-cost/low-income housing models and productsFacilitate Real Estate Investment Trusts (REITs)Provision of long term funding for housing loansHousing Observatory (housing market information system)Capacity building of the mortgage banking industry in Pakistan
9 Mortgage Refinance Company Develop the Primary Mortgage MarketProvide financial resources to enable primary mortgage lenders (PMLs) to grant more loans at fixed/hybrid rates and for longer tenurePrepare PMLs for BASEL compliance by narrowing the gap between the maturity structure of the housing loans and the source of fundsEnsure loan standardization across primary lending institutions which is necessary for any future securitizationDevelop the capital marketsProvide more private debt securities (Bonds) with different maturities and rates for investment of surplus fundsPromote ABS as a tool for raising funds from the capital marketsCreate a Yield Curve to serve as a benchmark for other institutions
10 Development of Prudential Regulations The Housing Finance regulations are covered under Consumer Finance Prudential Regulations.Since Housing Finance has its distinct nature and scope, there has been growing demand from all stakeholders to separate Housing Finance from Consumer Finance.SBP intends to announce reviewed Housing Finance Prudential Regulations this year.
11 Development of Mortgage Guidelines Comprehensive set of Mortgage Finance Guidelines covering all facets of Housing Finance (Conventional and Faith-Based) based on best lending practices.With active involvement of Association of Mortgage Bankers and feedback from other Stakeholders, these Guidelines would be launched this year.
12 Large Scale Builders Finance Model SBP is working to develop financing models to facilitate large-scale builders/ developers’ access to formal financial sector.The Association of the Builders and Developers (ABAD), Investment Bankers, Association of Mortgage bankers (AMB) and Rating Agency have been consulted for the purpose.Key challenges include:Corporatization of large-scale developersBankable financial statementsCredit rating (Entity and Instrument Ratings)Fiscal issues relating to Book Value and Market Value, declared income and wealth etc.
13 Initiatives in Low cost Housing Ashiana Housing Scheme by Punjab Land Development Company (Punjab Govt.).Hawksbay Scheme 42 by Lyari Development Authority Karachi (plots + residential infrastructure)Lyari Re-settlement ProjectHousing Project by Ansar Management CompanyIncremental Housing Scheme “Khuda Ki Basti” by Saaiban-NGO