Land of ridiculously high costs

Editorial, Normal

The National, Friday June 21st, 2013

 THE high cost of living in Papua New Guinea has ta­ken away much of the shine from the country’s image of paradise that is portrayed in glossy tourism brochures around the world.

In fact, the “land of the unexpected” has become the land of ridiculously high cost of goods and services.

First-time foreign visitors and tourists usually get a rude awakening on arrival while the regular traveller has become accustomed to a fact of life that our citizens endure each day as they try to make ends meet in urban centres such as Port Moresby and Lae.

Indeed, the high cost of goods and services has transformed our paradise into an unattractive destination for foreign visitors and almost a living hell for a great number of Papua New Guineans.

The soaring cost of hou­sing and rental accommodation in this country is considered to be among the highest in the developing and deve­loped world.

For example, low cove­nant housing and accommodation rentals in the less affluent residential suburbs of Port Moresby fetch up to K500 per week.

Rentals for executive class accommodation in the affluent suburbs fetch up to K5,000 per week.

And more for the luxury units in condominiums that have been popping up like mushrooms in the capital city.

One of the causes of the skyrocketing rental prices in the past three years has been the high demand for ac­commodation brought on by the PNG LNG project.

While the ExxonMobil-led K41 billion liquefied natural gas project has been cre­dited for the country’s current economic and investment boom, the downside has been its inflationary effect on the soaring costs of goods and services such as housing and accommodation rentals, particularly in Port Moresby. 

It is, therefore, welcome news for existing and potential tenants that the Government, through the Treasury Department, is considering a recommendation to regulate housing prices in PNG.

Treasurer Don Polye has asked his department to exami­ne a recommendation by the Independent Consumer and Competition Commission (ICCC) to regulate the country’s housing market.

Polye, who was acting prime minister while Peter O’Neill was on a state visit to Indonesia earlier this week, said his focus was to reduce high prices and inflation.

“I would like to see a market that is less regulated and free, competitive, quality-orien­ted and more thriving,” the treasurer said without giving any details about the ICCC recommendation.

Polye will bring smiles to the faces of many working class Papua New Guineans, especially existing and potential tenants, if he approves the recommendation to regulate the housing market.

Why should real estate companies and property owners in PNG continue to dictate the prices of housing and rental accommodation without taking into account the affordability issue?

They have been charging tenants and employers, who provide accommodation for their workers, exceedingly high rental rates even for sub­standard accommodation.

You only have to look in the daily newspapers to see the kind of rentals that are being charged in Port Moresby and Lae. 

It’s utter ridiculous, to say the least.

The past three years has seen accommodation and property rental prices reach astronomical heights.

The temptation is to make a throw away comment as did Polye that competition will drive the market and pricing.

In an ideal environment that might be, but not in PNG. Supply can never quite match the demand. Not now and not for some time in the future.

The housing market is controlled by a very few players. 

They can and may operate pretty much like the oil cartel where prices are dictated more by them rather than be driven by demand and supply as one would normally expect of a market economy.

A regulated market will ensure that commonsense prevails and that housing and accommodation rates are brought under control and more importantly, made more affordable for the working class citizens.

The onus is on Treasurer Polye and his department to ensure that this happens, one way or another as it is in the best interests of both tenant and landlord.

For its part, the ICCC and its chief executive Dr Billy Manoka should be hailed for tackling this issue head on and pushing for the regulation of the housing market, which has been long overdue in this country.