The Pro-Active Voice of the Morobe Business Sector

LCCI Logo 2021

Is more affordable housing on the way in PNG?

With the Papua New Guinea Government highlighting the need for more affordable housing in the country, not-for-profit organisation, Community Housing, believes it has the solution.

Papua New Guinea has not escaped the usual spike in housing prices that accompanies major industrial developments, such as the PNG LNG project.

Housing prices in PNG have risen to levels out of reach for many businesses and communities, prompting the PNG Government last year to announce plans for the National Housing Corporation (NHC) to build up to 40,000 new affordable homes around Port Moresby to relieve the issue.

A National Research Institute (NRI) report, called Understanding Property Price Movements in Port Moresby, supported the housing observation, revealing that the city had witnessed a property boom ‘in the last five years or so’.

‘Commentators attribute the construction phase of the US$17 billion PNG LNG project as being the driver for the increased level of activity in the properties market,’ the NRI report said.

‘While the stock of properties at the high end has increased markedly, the same cannot be said of the middle to the lower end of the housing market spectrum.’

The impact of the LNG boom on PNG’s housing sector caught the attention of Australian not-for-profit, Community Housing Ltd, which undertook its own housing affordability study in PNG last year.

Its findings conclude the value of quality housing in the country has risen to levels ‘up to double’ what average professionals can afford to pay.

Finding a solution
The study found that the average employed person in a ‘good job’ in Port Moresby can afford up to a maximum of K420,000 for a two bedroom house and land package.

CHL Managing Director Steve Bevington said the study found that an affordable dwelling for sale in PNG was more than double this price, while private rents were ‘exorbitant’.

‘It is clear that there are vast areas of housing supply unmet at the price that people can afford throughout Papua New Guinea,’ Bevington told Business Advantage PNG.

‘There is vast desire to change that: a desire from the people in Papua New Guinea and from employers who want a stable workforce.

‘We have found there is an underlying desire from the professional workforce of people who really want to live in better circumstances.’

International housing initiative

CHL, an Australian-based organisation that aims to deliver affordable housing to low and moderate-income people, has established similar initiatives in East Timor, Chile and India, where housing affordability is a major challenge.

Since establishing operations in Port Moresby last year, CHL has undertaken research to examine the housing situation in PNG to determine an approach that would tackle the country’s shortage of affordable housing.

‘We spent a year looking hard at the environment and working out if there is a solution we can implement to resolve that problem,’ Bevington said.

‘In order to do that, it requires a market-based approach which delivers the quality housing a professional in PNG wants and that is around half the cost of what the market is now is.

‘Then there needs to be a framework which enables the much vaster communities secure housing. We basically investigated both tracks in a parallel way.’

Community partnerships

Bevington explained that CHL would aim to work in partnership with like-minded organisations to tackle the shortage of community-based housing.

CHL is in partnership discussions with several large employers in Port Moresby to develop an affordable housing delivery program, which would involve up to 200 employees. Bevington hopes those talks will conclude later this year.

A number of community housing partnerships have been established or are being proposed in PNG to resolve the issue.

The PNG Government’s plan to build a further 40,000 houses in Port Moresby was launched last year at two areas outside of the PNG capital.

With the NHC, NRI, the PNG Office of Urbanisation, and Department of Lands, the PNG Government secured the two urban development leases as a way of solving the housing problem facing employers and professionals in the city.

The PNG Government also launched a First Home Ownership Scheme with Bank of South Pacific in 2014 to encourage more home ownership. The scheme is providing housing loans to approved first home borrowers, over a 40-year term and at a ‘somewhat concessional’ interest rate of 4% per annum. The maximum loan amount under the scheme is currently K400, 000.