Housing is a challenge: Chamber

The National Business

By DALE LUMA
IT is a challenge for the average worker to find affordable and quality housing because of the expensive costs, according to the PNG Chamber of Commerce and Industry (PNGCCI).
Chamber president Ian Tarutia told The National that the income levels of most workers were low. The other issues relate to land availability, infrastructure and service costs.
“We need a concerted and combined effort between the State, finance institutions, banks, super funds and private developers to deliver a solution that addresses housing for a majority of our people, especially in urban areas,” Tarutia said.
“Affordable and quality homes are a significant challenge for the average Papua New Guinean worker. Current prices are still out of reach for many.”
He listed the reasons as:

  • ACCESS to titled/alienated land – more than 90 per cent of land is still customary owned. A land title is required for loan security if bank financing is required;
  • COST of servicing the land – installing water, power, sewerage. These costs are factored into the final sale price of a home;
  • COST of infrastructure – roads, drainage, lights. They are factored into the final sale price of a home.
  • INCOME levels – it is still low for the majority of workers. Most are on minimum wage, less than 10 per cent of our country’s population are contributing meaningfully to savings schemes like superannuation.

“If you add service and infrastructure costs, without considering the house construction itself, the affordability notion is already defeated unless these costs are borne by someone else,” he said.
“Quality is about using materials that will last and not deteriorate or require repair and maintenance in the short term. Some of these materials may need to be imported. Steel, plumbing, interior/exterior paints, lighting, electrical wiring for instance. These vital components of a house attract import duty.
“This adds to the final pricing of a house. Add the service and infrastructure costs on top and already the price of a house is beyond the reach of the average worker.”
He listed the solutions as:

  • ACCESS to land. More land needs to be made available;
  • REMOVE stamp duty on imported materials used for house construction, especially for first-home buyers;
  • IF the State is unable to provide serviced land (power, water, sewerage, roads, drains), housing developers should be given concessions such as tax credit arrangements so these land development costs are not passed on to buyers;
  • EMPLOYER-sponsored home ownership schemes. A public-private partnership between National Housing Corporation, super funds and housing developers.

“There are a number of private housing developments that are taking place around the country, most notably in Port Moresby.
“However median prices are around K550,000 on state lease land, which again is out of reach for many of our people.”