Working Paper 03

Ibrahim Khalil, Umar Nadeem

This working paper builds on an earlier series of efforts to assess and analyse the Naya Pakistan Housing Program (NPHP) and its nexus with the goal of affordable housing for all in Pakistan. The following publications provide important and detailed contextual information to better understand the analysis and recommendations presented in this paper:

This paper starts by describing the fundamentals of the urban economy and describes the basic concepts that will be used as building blocks in analyzing the dynamics of the real estate and housing market in Pakistan. The primary focus throughout the paper is affordability. We draw linkages to, and assess the implications of various factors as they relate to affordable housing. The paper then presents an affordability framework to explain key drivers of affordability and how they apply to the Pakistani context. A summary of selected literature highlighting international evidence of housing programs and interventions is presented throughout the paper to identify critical policy pitfalls that Pakistani decision makers should consider. The last section covers specific policy recommendations focusing on strategic and tactical interventions that can contribute to an effective housing program, that privileges affordability.

To improve the affordability of housing in Pakistan, supply and demand dynamics will both need to be in sync to be able to reach an optimal equilibrium price of asset and/or space market in the housing sector. A disproportionate focus on demand side interventions, such as mortgage depth, without a corresponding increase in housing supply will only lead to increased debt burdens and worsen affordability. A supply side focus that does not take into account the need for land supply regulation will be abused by developers and it will fail to address affordability concerns. In order to truly leverage the opportunity that the Naya Pakistan Housing Program may offer for GDP growth, a holistic, robust and coherent cross-sectoral policy will have to be devised in a manner that addresses two foundational issues. First, that housing finance and land/real estate markets are regulated. Second, that a revitalization and growth of domestic industry connected to the construction sector is made central to the effort. However, no matter how strong regulation is, and how intimately a growth in the housing sector is linked to domestic industry, unless affordability does not underpin all decisions, the Naya Pakistan Housing Program will be at risk of failure.

You can read the complete Working Paper 03 here.

Ibrahim Khalil is responsible for project financing of residential real estate construction for one of the premier real estate companies in Canada and has an experience of investing in and
managing residential real estate in US, UK and France.


Umar Nadeem is a policy and governance advisor, and has worked in Asia, Europe and Africa on public sector development. His areas of expertise are governance, service delivery, and digital government. He is a graduate of the Lahore University of Management Sciences, and holds a Master of Public Policy from the University of Oxford.