Government urged to address housing crisis

The Government has been urged to urgently address Papua New Guinea’s housing crisis or a serious security concern may emerge.

And it has also been urged to look at housing alternatives such as cheap local bricks and utilising the services of Habitat for Humanity.

These concerns were raised after a series of articles in The National about the serious housing problem in the country, with housing now beyond what the average Papua New Guinean can afford.

“All these statistics show that the government for the last three decades has still not come up with an affordable housing solution for the majority of Papua New Guineans,” said prominent commentator Reginald Renagi.

“The gap between the haves and the have-nots widens each year until we will have the have-nots posing a very high national security threat on the haves.

“It is no good quoting many figures to confuse and disappoint our people, but the question remains: what is the solution?

“We do not want to see more squatter settlements growing up all over Port Moresby and other major centres.

“The Somare government must find an answer soon before the next elections as we are sitting on a very explosive national security situation.”

Mr Renagi said there were many alternatives such as mud bricks and Habitat for Humanity, however, the Government must have the political will to address this problem that has been outstanding for many years.

“Making local bricks by our own people is a great idea that can save us millions from importing it from overseas,” he said.

“The two major super funds - Nasfund and Numbawan Super - are already giving out housing loans to their members but the way it is presently designed is it only suits the upper, middle and higher income level executives.

“So again, the middle and lower wage earners will have a hard time repaying their loan repayments.”

Former PNG resident David Williams suggests: “There is a huge need for a total rethink of the approach to solving this problem.

“It needs to go back to village communities and to village schools.

“Provincial governments should employ qualified tradesmen to teach practical courses in building trades - carpentry, masonry, electrical, plumbing, roofing, etc - within secondary school curriculums, and to adult classes drawn from the community.

“Those who enrol should be taught all the basics of construction, and a simplified building approval and safety inspection service implemented using the same tradesmen doing the training work.

“Money should be set aside to finance community toolkits: patrol boxes filled with all of the tools needed for construction.

“These could then be purchased by local level governments and the tools made available to owners/builders on payment of a refundable security bond and a small fee.

“Some of the timber companies could be approached to develop kit housing that is affordable, and these should be subsidised by government in much the same way as the ‘first home ownership scheme’ works in Australia where first home owners can get a grant of up to $14, 000 from government.

“I also thoroughly agree in bringing in groups like Housing for Humanity to get local brick-making happening as well as other low-cost initiatives.

“The financiers can do their part ... making loans of smaller amounts available to owner/builders over longer periods, so that repayments are affordable.

“Financiers naturally will require security ... and if government is genuinely interested in solving the housing crisis, then governments should step in and offer security bonds for low income families.

“The payoff in terms of greater community stability, an upskilled workforce, fewer settlements, and fewer social problems resulting from unemployment, boredom and homelessness would more than compensate all parties.”

Reichard Thanda, a Papua New Guinean studying in the United Kingdom, described the housing issue as “dangerous”.

“This is dangerous since it can drive the demand for a certain good sky high,” he said.

 “Housing in this case,  which now becomes a luxurious item or ‘Veblen Good’,  as it is know in economics,  results in subsequent increase in prices or asset bubbles.

“ Empirical evidence clearly suggests that one of the factors which has led to the recent global financial crisis involved housing mortgages , first in Thailand which has eventually spread throughout the rest of South-east Asia leading to the Asian Financial crisis in 1997, and recently in the US and elsewhere.

“The ‘asset bubble’ remains so long as there are potential buyers than sellers which creates a ‘wealth effect’ - where investors judge themselves to be richer as the value of their assets increases -  until it reaches certain stage when there is a divorce between the asset’s price and its underlying value.

“When this happens there is a quick drop in asset prices which can trigger a crisis if the relevant authorities are not careful.

“In a nutshell, such speculation is dangerous especially in situations like now in Port Moresby, where houses prices have inflated to sky-high prices.

“Unless Government intervenes either through policy interventions or National Executive Council directives, we are heading towards a period of turbulence.”