Dr. Lindsey Kutan, Senior Research Fellow and the program leader for Sustainable Land Development Research Program at the PNG National Research Institute (PNG NRI) writes about the Lack of an updated National Housing Policy which has exacerbated the housing crisis in the urban centres of Papua New Guinea. He has found that past policy reforms and interventions by the Government undertaken through an ad hoc and piecemeal approach has encouraged a dysfunctional housing market. Download full article here.

A holistic policy framework is needed to address housing crisis in Papua New Guinea

Published by My Land My Country  | May 26, 2021.

The rapid growth of urban population in the major towns and cities of Papua New Guinea (PNG) has exerted overwhelming pressure on the housing sector.

The National Capital District Commission Urban Development Plan Review (2020), projected that Port Moresby’s population, in the next 10 years, will increase to over one million. The report further noted that this will require between 27,300 and 62,338 additional houses to meet the housing demand by 2030.

However, it is widely acknowledged that PNG’s housing market is constrained by several structural impediments such as acute shortage of affordable houses and exorbitant house prices.

Others include the high demand for houses relative to supply, and the increase in unplanned informal settlements in urban areas. The impediments are exacerbated by the grim reality that PNG has an outdated National Housing Policy, which has been under review since 2017.

There is a need to complete the review of the National Housing Policy, 1994. This is crucial to address the current housing needs and to provide incentives for construction and supply of houses to meet the housing demand.

Over the years, successive governments and key agencies have adopted and established numerous initiatives, programs and institutions to cater for affordable housing strategy.

But the efforts turned out to be futile and on ad hoc basis giving rise to ambiguous and inconsistent policy directions, which consequently derailed proper urban housing development.

For the housing sector to progress, it is critical that the key stakeholders have a clearly defined roadmap. In order to develop this housing policy framework, it is necessary to draw lessons from past ‘ad hoc’ policy attempts.

Furthermore, it is important for the policy framework to incorporate economic principles in order to foster and harness a sustainable housing market. It is also necessary for the policy to conceptualize the housing market into the supply and demand framework.

This contributes to more understanding of the roles and functions of the various stakeholders involved in the housing sector. Lessons from the past ad hoc policy attempts There were policy reforms and interventions targeted at promoting the development of affordable housing in the recent past.

However, the outcomes were riddled by challenges that continue to contribute to the dysfunctional housing market.

According to Webster et al. (2016), the main challenges include the following:

  • Lack of consistency and coherence in Government policy and actions. Various housing committees and taskforce commissioned by PNG Government have delved on housing issues.

However, three decades later, most of the technically sound recommendations, endorsed by the National Executive Council (NEC), have not been implemented.

For example, Webster et al. (2016), highlighted three studies conducted in the past on the housing sector. These include the Morgan Committee Report of 1978, the National Housing Taskforce Report of 2007, and the Independent Consumer and Competition Commission (ICCC) Report of 2010.

All these reports recommended that Government should withdraw its direct involvement in the construction of houses. On the other hand, it should provide a facilitating role to encourage a conducive regulatory environment for the private sector to address the housing needs.

Despite the NEC approving this recommendation, the Government through its various agencies, have continued to compete with the private sector in the housing market.

This has crowded out the private sector. However, almost all the government housing projects such as the Public Service Housing Scheme and the Duran Farm project have not been successful.

  • Lack of coordination and understanding of the roles and functions of the multiple stakeholders in the housing sector. The supply chain of houses requires input from various stakeholders in the public and private sector.

The processes include facilitating access to land, physical planning, town planning for development of trunk infrastructure and land allocation through the land board.

In addition, approvals of regulatory requirements across various agencies including physical planning and building boards. Furthermore, inspection approvals from Eda Ranu (Water PNG) for water and sewerage, and PNG Power for installation of electricity.

However, weaknesses in the coordination across these stakeholders in the housing sector results in long delays leading to the high cost of houses. Webster et al. (2016) likened the housing sector to a grand orchestra, lacking a ‘conductor’ to bring all musicians together in harmony.

  • Lack of recognition and support to the private sector in supply of houses. All the housing reports aforementioned has re-emphasised the importance of the private sector-led strategy in constructing houses.

Although, the Government acknowledged this recommendation, the continued lack of support and recognition of the private sector has resulted in wastage of public resources.

It was not until 2013 that the Government introduced the First Home Ownership Scheme (FHOS) with Bank South Pacific. This has stimulated effective demand for formal housing, particularly among the high and middle income earners.

The private sector responded efficiently in the development of residential estates like Skyview and Edai Town. However, the terms and conditions of FHOS are beyond the reach of the low-income earners. This contributes to the boom in informal housing arrangements in the informal settlements.

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