Measuring the Impact of Remittances on Housing Demand: Evidence from Large Cities in Pakistan

2020:10

The study investigates the impact of remittances on housing demand in large cities in Pakistan. Heckman’s sample selection model is used to assess the effects of remittances on standardised housing units using the Household Integrated Economic Survey (HIES) 2015-16. Housing prices are calculated using the hedonic model that captures locational variations. The results show that remittances have a positive and significant impact on housing demand in large cities in Pakistan. Foreign remittances lead to a considerable increase in the need for new houses by increasing the purchasing power of households. With more resources, households are increasing their housing expenses. Besides, remittances have a positive and significant impact on rooms per person, which is indicative of accommodation capacity. The considerable contribution of remittances to increase the new demand for housing among migrant households remains consistent in all provinces. Two implications emerge from this analysis. On the one hand, remittances facilitate overcoming the housing deficit and, on the other hand, can lead to more congestions in large cities. The government should encourage overseas Pakistanis to invest in new housing schemes launched by the government to meet the housing demand for low and middleincome groups.