Housing has become unaffordable

BY NFP LEADER PROFESSOR BIMAN PRASAD

In July 2017, a Times/Tebbutt poll revealed 44% of people surveyed stated that housing was less affordable than 5 years ago. 57% of people believed housing rental was too high. And 33% of people believed the cost of building homes was high as well.

This is the predicament facing Fiji’s growing urban and peri-urban population.

No surprise

It is no surprise that majority think housing has become less affordable and house rental is high.

It is beyond the reach of low and middle-income earners or families to afford a decent home. This is resulting in ballooning of squatter settlements numbering more than 230 country-wide.

This is exacerbated by the fact that there is increasing rural to urban migration because more and more of our people are losing interest in agriculture due to lack of incentives and look for opportunities in urban areas.

The 2017 Population and Housing Census revealed that more than 494,000 people or almost 56% of Fiji’s total population of almost 885,000 live in urban areas. The rural population was over 390,000.

The 2007 Census recorded almost 425,000 people living in urban areas while over 412,000 were rural residents. This means that in the 10 years between 2007 and 2017, rural population decreased by 22,000 while urban population increased by almost 70,000.

Squatter and informal settlements

The increase in our urban population has also resulted in ballooning of squatter and informal settlements, both within the boundaries of our 13 municipalities and urban centres not yet declared towns.

Again, this is due to lack of affordable housing, rising rentals and high cost of building materials. Housing Authority and Public Rental Board, as well as HART, that mostly caters for those living in poverty and abject poverty, are simply unable to meet the demands of housing by our growing urban population.

Low and middle-income earners, despite Government’s first home buyers’ and build incentive of a $10,000 grant for those individuals or combined income of $50,000 or less, cannot afford to either buy or build a decent home due to high cost of building material.

Lack of meaningful and decent wages and salaries for employees, especially new graduates entering the job market, is another obstacle.

The inability to invest in homes and land is probably a major reason why more and more of our people are buying cars because that is within their means and they can afford to make repayments.

 

PRB saga

Government’s failed policies in providing decent low-cost housing is best summed up by the disastrous Public Rental Board (PRB) flats in Raiwai, Suva.

The implementation of that project was a colossal disaster as far as its funding was concerned. The initial budget and loan was for $9 million but the cost of the project skyrocketed to almost $22million.

Every project has some variation but nothing of the sort of Raiwai flats. It was an increase of $14 million. On 19th April, NFP Parliamentary Whip Honourable Prem Singh raised this issue in Parliament during debate on the 2015 annual report of PRB scrutinised by the parliamentary select committee on Social Affairs asked; –

“Who was responsible for this project? What was the then Board doing? This financial disaster has resulted in Raiwai becoming an accommodation for the middle class instead of providing cheap, subsidized housing to our ordinary people and those living below the poverty level”?

The newly constructed PRB flats cater for middle income families who can afford rental as high as $450 a month for a 2-bedroom unit. It has 100% occupancy and one reason why rent is high because PRB has to meet repayments to the Exim Bank of China for the $22 million loan.

 

Solutions

There is a need to evaluate the regulatory framework (such as the Town Planning Act and Subdivision of Land Act) regarding urban development and how it impacts land subdivision costs and the price of land to build homes.

Infrastructure development like multi-lane roads and highways could open up land required for housing development. This can have impact of reducing pressure on house prices in Suva-Nausori and Nadi-Lautoka corridors and also cater for rising demand through incentives such as reduction in time required to travel to and from work.

  • The NFP had announced in September last year that in Government it will construct two more lanes between Nadi and Lautoka making it a four-lane highway on that segment of the Queens Road.

 

  • Furthermore, we have also announced that in Government we will look at the feasibility of a Coastal Highway between Nausori and Suva.

 

  • These two developments will undoubtedly open up more land for housing once our people find land suitable for development has access to infrastructure.

 

 

  • NFP will also review the urban development legislation to provide those living in squatter settlements with state support for basic facilities such as roads, water supply, electricity and sanitation.

 

  • We will review legislation to provide proper land division and titles for squatter families. The current Approval to Lease notices or titles being given to residents of squatter settlements is not working.
  • Further, we will encourage indigenous landowners who wish develop their land for housing to do so and become property developers for this purpose rather than just being lessors. More details will be announced in our manifesto
  • The NFP will review the First Home Buyers Grant policy to assist low and middle-income families buy their first home.

A more comprehensive policy on affordable housing will be revealed in our manifesto.