WHY HOUSING IS SO EXPENSIVE IN PORT MORESBY – FAR BEYOND THE REACH OF THE LOW TO MIDDLE CLASS FAMILIES. This was a question asked by one of my friend Teine Koroki on FB and my brief answer to his question. Johnny Tee 8th January 2015 Middle class Papua New Guineans can afford a K650 per week accommodation, however that too places alot of stress on the budget itself. During the construction phase of LNG, rental prices sky rocketed pushing hardworking PNGans into squatter settlement and other means of affordable accommodation. Now that the contractors have gone, there is slight change in the price allowing a reverse shift. Most 3 bedroom houses and apartments regardless of the location are K1500 to K3000 per week. When you do the math, you need to earn more than K100 000 pa to make salary sacrifices to afford an apartment. I dont think 90% of university graduates working in Pom are on that salary range. Now if majority of Papua New Guineans are below K90 000 salary range then who is occupying all the apartments sprouting everywhere in Port Moresby? Papua New Guineans are living in Squatter Settlements and established suburbs. The Apartments within Port Moresby to my estimate outnumber company directors and executive by 10 to 1 (my belief apartments are for the rich). If Most of these apartments are not occupied by nationals then who is? Foreigners? If they are then we can safely assume that the number of foreigners in Port Moresby outnumber the Nationals. Someone in the know can shed some light here on how the economics of housing/real estates thing works. In a nutsheell, this problem is very true in Port Moresby and Lae, including Madang and other main centres in PNG.There are many different factors but the primary causes are (i) scarcity of Land available for developing housing in those centres. Those who own vacant lands within the city limits are cashing in on the demand for Land hence driving the prices up. Often most end up having two titles to one piece of land hence ending up in court whilst the land sits idle. Lands are not freed for housing developments within the city limits where most middle class families would want to live. (2) the housing developments within prime locations around the city or exclusive suburbs are targeting high end customers who can pay K2000 to K3000 per week. this is far beyond the reach of most middle class families, except for those families who own houses through government home ownership scheme etc are good whilst the vast majority are forced to turn to the informal housing sectors -which are the settlements. The informal Housing sector s are cashing in on the demand by charging high rentals for low quality one or two bedrooms etc. (3) the Real Estate industry is currently unregulated, and the real estate companies primarily make money from commission thus in this current situation, business is good for them. The ICCC said its not wise to regulate the industry. So basically the supply is not meeting the market demand for affordable housing for the low to middle income families living in the city. Naturally the market should respond and correct itself (Supply respond to meet the market demand) but in this case it did not because land within the city is scarce for housing development. The developments we see around only target high end customers. Various housing policies and recommendations have been made to the government many years but have not really resolved this problem. NHC will not solve this problem given its history. ICCC did a review on the PNG Housing and real Estate Industry and made very detailed recommendations to the Government. There are so many things that needs to be done. The current proposed housing Development to be undertaken with the loan from Chinese Exxim Bank will not solve this problem. it may but not all. if the recommendations by ICCC is fully implemented by the government committed to implementing it, then it will help the market to respond to the demand for affordable housing and that will stimulate growth and create employment within the Housing industry. But if the recommendations by the ICCC are not acted upon then that’s it. We have to make do with whatever we can to live in the city. some pilot projects undertaken to ease these problem of Land shortage in the city to allow families to acquire land to build house is the Taurama valley in POM and another one in Goroka, where Land owners are freeing up their land by sellling it to the people who want to buy and build their house. Relevant Laws have been amended specifically to allow landowners to do that properly under the existing Laws to try to address this problem of land shortage in the city hence the housing problem.
Posted on: Thu, 08 Jan 2015 06:15:37 +0000