Making dreams come true

 WHILE announcing the National Government’s grand housing loans scheme this week, Prime Minister O’Neill described it the best initiative so far to address the basic human need for shelter. 

It is envisaged that through this scheme, owning a home would not remain a dream but hopefully be a reality for wage earners or those who have a source of regular income and are able to afford it.  

The first home ownership scheme will make housing affordable, the PM has promised fellow citizens who have waited for long for just such an undertaking to enable them to own homes.

For the first time, this government will make money available in an annual budget and paid directly into a commercial bank for citizens to borrow to buy homes.

O’Neill announced during a radio talk-back show this week that an initial K200 million will be made immediately available to kick-start the housing loans scheme followed by another K200m in the 2015 budget for this first home ownership scheme. 

The funds will be deposited with the Bank South Pacific for citizens to borrow.  

BSP, as the largest commercial bank with branches and sub-branches in all provinces, is well placed to be part of this government initiative.  

What’s more, as part of its community obligation, the bank will underwrite all costs associated with the scheme and maintain a low 4% interest on all loans over a period of 40 years. 

The 4% interest is the lowest offered by a bank in this country and basically aims to improve access to credit for Papua New Guineans. 

Loan repayments and interest payments will be placed into this revolving fund to allow for future continued borrowing.

It is intended that future investment will be available once the programme is established to provide further funding depending on the success of the first home ownership scheme with up to K400 million to be allocated over a five-year term.  

Initially the housing loan will be provided at a fixed interest rate of 4% subject to current market conditions prevailing  with repayment terms up to 40 years available, the bank said.

BSP Group chief executive officer Robin Fleming has described the bank’s involvement in the home loan scheme as a privilege because the bank firmly believes in creating wealth, hope and opportunity for all citizens.

However commendable the housing scheme is, it is bound to be met with some reservation and scepticism because of many similar housing schemes initiated by government departments, super funds or even the National Government have unfortunately never materialised or made little success owing to varied reasons including negative market conditions.  

Besides, there are some obvious roadblocks that have to be cleared before its successful implementation. 

One such hindrance is the scarcity of freed up state land to develop.  

Urban housing is limited because traditional land outside the periphery of towns and cities is tightly guarded and freeing it up requires a lot of work or is met with resistance by landowners.

Many industry experts have singled out the cost of acquiring land as the biggest factor in inflated price of houses in urban settlers.  

A scarcity of land means a high demand and high prices.  

Assurances by both the prime minister and his State Enterprises Minister Ben Micah that more state land would be freed up are encouraging and indicative of a government committed to seeing this one housing scheme bearing fruit. 

The government has instructed the Department of Lands to work on making more state land available for development.

This will ensure that the cost of housing is kept at a minimum available to all Papua New Guineans who seek to own a home of their own.

Otherwise, competition for limited available land will still make housing a far off dream even with the best of intentions by the government. 

The Department of Lands ought to start the process of freeing up the land now to make this one government housing scheme successful.