Papua New Guinea’s construction sector as a whole has returned to pre-COVID levels, driven in part by a growth in demand for housing. Business Advantage PNG looks at what’s driving the trend.

Demand for housing from PNG’s growing middle class is rising. Credit: Atlas Steel

One key area of growth in housing in Papua New Guinea is for housing tied to a person’s employment – what the CEO of Nambawan Super, Paul Sayer, refers to as “institutional” housing.

In PNG, this housing has typically been most associated with public service employment but more recently this has expanded into the private sector, as competition among employers for skills has led to improved salary packages and greater employee benefits.

“We’re seeing people saving more and getting into a savings culture.”

“Sometimes the level of income that people have is just not going to get you into a house, So, as an employer, there’s a need to look at providing institutional housing,” notes Sayer.

He sees potential for PNG’s superannuation funds to partner with the State to develop more such housing, given the State possesses land in prime locations but doesn’t necessary have available capital to develop it.

Savings generation

PNG now has a generation of workers reaching retirement after a period where superannuation has been both compulsory and well-managed. The deposit for a home loan often comes out of that superannuation payout.

“There is a strong middle market demographic here that’s continuing to grow,” observes Greg Pawson, CEO of Kina Bank. “We’re seeing that through the demand for home lending.”

In addition, says Sayer, “we’re seeing people saving more and getting into a savings culture.”

“This is all about individual people wanting to move into the housing market.”

PNG’s First Home Ownership Scheme, first introduced in 2016 and delivered through BSP Financial Group, is also helping provide finance for first-timers seeking to construct or purchase a home on vacant State or State-leased land.

All of these factors are combining to drive more housing construction, both in estates such as Edai Town and Tuhava Town outside Port Moresby and the ever-expanding suburb of Gerehu, but also on individual blocks.

Business beneficiary

One beneficiary of this trend has been housing and steel fabrication company, Atlas Steel.

“About five years ago, we morphed into housing construction. Prior to that, we were mainly a materials provider to industry and we still do that,” says the company’s Port Moresby branch manager, Peter Browne.

Atlas now has around 750 workers manufacturing 10 to 20 homes monthly, in both Port Moresby and Lae. Prices range from K45,000 up to K500,000 for a five- or six-bedroom home, with the average spend around K250,000.

“This is all about individual people wanting to move into the housing market. A lot of those people are bank employees, or employees of other larger companies where they have home ownership schemes,” says Browne.