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Minimum wage versus house affordability

Minimum wage versus house affordability

Pakistan is among those countries which have minimum wage law. Minimum wage is raised in the annual budget. In the current budget 2017-18, minimum wage has been increased from Rs. 14,000/- to Rs. 15,000/-. People who are living on minimum wages have also needs and definitely want decent living. But who can afford to buy a home with the minimum wage?

Minimum wage versus house affordability

The smallest homes in Pakistan are of size 2 Marla. The average price of 2 Marla house in Pakistan is approximately 30 LAC. A person on minimum wage can buy 2 Marla house in Pakistan after spending 16.6 years income. But world’s affordable house price to income ratio is 1:5 or a person can buy house if he spends 5 years income. Even if we see the rents, smallest houses like 2 Marla have rents of Rs. 10,000/- per month, which is unaffordable for the people on minimum wages. This is why the people on minimum wages are living in slum areas or renting single rooms.

The government has not included housing in national development policy

The government has allocated lot of funds for development projects. But unfortunately once again, government has not included the housing in its development policy. We need social housing or government housing revolution in Pakistan like the western countries. In UK, 67% housing is the government housing. UK government provides free homes to the people who are living on minimum wages or are jobless. On the other hand, there is no government housing for the homeless people in Pakistan. Due to sky high house price, homelessness is rising in Pakistan. Many people are forced to sleep on footpaths or live in slum dwellings. Unless we start the housing revolution in Pakistan, minimum wage people will be unable to buy or rent decent homes.

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(4) Comments

  1. Muhammad azeem yddin

    on   said 

    Nice to read you very informative and heart shaking information.

    their is nothing to says about the government only pray to god that shows RIGHT path. MAI ALLAH SE GOVERNMENT OF PAKISTAN KE LIYE HIDAYAT MANGTA HU.

    regarding those people who have Rs 15000 salary on last days they can not have to eat their required good.

    they can not have money to arrange graveyard for their beloved one because this cost around minimum Rs 10000. so how they can buy home.

    it is reality and it must be very deeply and first priority matter.

    a government can not install railway line during last 70 years and now how it become hopeful to arrange home for poor people?

    it is just for imaginative thoughts or a wishful thinking and nothing’s.

    once the time China was poor and Pakistan was rich. and now see the difference ask someone who has just arrive from China.

    Reply
  2. Babara Maqsood

    on   said 

    Nice article. Pleade can you make graph or some detail which shows what house we can buy with our salery.
    Also please write about new property taxes and its effect on real estate market.
    Many thanks

    Reply
    • Babara Maqsood
      I am collecting information about property taxes in new budget 2017-18 and will write a blog very soon.
      Simple formula to know your home affordability is to multiply your annual income with 5 as affordable houses are one which are bought with just 5 years income as mentioned in blog.
      For example your income is 1 LAC per month. So your annual income is 12 LAC and 5 years income is 60 LAC.
      So you can buy house of worth 60 LAC.
      The same formula is calculated for mortgages.

      Reply

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