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State Bank of Pakistan developing secondary housing mortgage market

Deputy Governor State Bank of Pakistan Muhammad Kamran Shehzad has said that there is an imminent need for establishing a secondary housing mortgage market in the country to narrow the broadening gap between demand for and supply of housing units.

Presenting his paper at a South Asia Regional Housing Workshop, organised by World Bank Group (World Bank/International Finance Corporation) in Jakarta recently, he said it would enable the financial institutions dealing in mortgage loans to reduce the mismatching of maturity profile of their assets and liabilities.

Shehzad said that the total housing finance portfolio of banks and development finance institutions (DFIs) in Pakistan as on December 31, 2008 was Rs 88.2 billion witnessing a growth of almost 300 percent over last five years. Despite achieving significant growth, the mortgage debt-to-GDP ratio is less than 1 percent compared with 5 percent in India, 18 percent in Malaysia and 15 percent in China, he said and added the State Bank is currently working on an initiative to develop secondary housing mortgage market.

He said that Pakistan, like other developing countries, faces a critical shortage of housing units. According to conservative estimates, there is already a backlog of more than 6 million housing units, which is growing by about 300,000 units every year.

“This backlog, together with inadequate housing facilities has been affecting quality of life of the general public, especially the urban working class in Pakistan,” he said and added that average national occupancy rate per dwelling in Pakistan is over 6 persons whereas per room density is 3.5 persons as compared with the international standard of 1.1 persons per room. “The shortage of housing facilities is more acute in urban cities and towns where more than half of the population lives in slums or in irregular settlements,” he added.

The workshop was attended by 100 participants including representatives of central banks, housing finance institutions, builders, developers and representatives of multilateral agencies like the World Bank and Asian Development Bank. The participants belonged to Afghanistan, Pakistan, India, Bangladesh, Sri Lanka, Indonesia, Mauritius, Maldives, USA, Germany, Malaysia, Thailand, Australia, Nigeria and South Korea.

It was decided at the workshop to continue such an exchange of knowledge and know-how among the member countries by setting up a South Asia Regional Forum for Housing. An Advisory Board/ Task Force comprising representatives of the regional countries was set up to make this Forum.

The members of the Advisory Board represent central banks/regulatory authorities from the member countries. They are: Da Afghan Bank governor Abdul Qadeer Fitrat, SBP deputy governor Kamran Shehzad, R.V. Verma of National Housing Bank of India, Abul Quasem of Bangladesh Bank, and the representative from Central Bank of Sri Lanka.

World Bank’s housing finance consultant Zaigham Mahmood Rizvi will be the Coordinator. The National Housing Bank of India has agreed to provide the Secretariat Services to the Forum.


Source: Daily Times, The News, 10-Jun-09

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