You’re at a dinner party and someone brings up Prime Minister Imran Khan’s Naya Housing Program, a massive project for the poor. We broke down the numbers, arguments (for and against) all in one place.
The target is to build 5m homes in 5 years OR 1m houses a year.
These houses are for people who earn Rs15,000 to Rs20,000 a month. But people earning up to Rs100,000 can also apply.
Those who don’t own a house will be given preference.
The government is not building the houses, by the way. It will be the private sector which means, builders. They will not build all the houses in cities but will also see rural areas. This is why they are asking people to fill in forms to survey where the demand for housing is coming from.
Total cost: $180 billion or Rs24,120 billion
Cost per house: Rs1.5m to Rs2.5m
How people will pay to own these houses:
10% advance payment and 90% loan
For a Rs1.5m house, you pay Rs150,000 in advance and take a loan of Rs1,350,000.
You pay installments for 20 years and become the owner.
But it will cost you more than Rs1.5m after interest is added.
This is where it gets complicated: Critics say the project is not commercially viable. They give these arguments:
So the question is: The scheme is meant to cater to the lower middle class that earns just an average of Rs20,000. But if they’re paying 11% of their salary in just interest, how will they manage to pay off the actual loan?
Analysts believe the project is good but the target of 5 million is too optimistic.
Since the finance ministry and State Bank are working on the model, it is difficult to assess its soundness.
If they make a good model for housing finance, achieving even 25% of this target will be a big success.
The government and builders think it is doable: