As the capital of Papua New Guinea, Port Moresby (or “Town” or “POM” as known by locals) is the country’s most vibrant and active real estate market.
Port Moresby real estate is as diverse as the city itself with a range of homes for sale and rent to suit all budgets and lifestyles. From one bedroom apartments and bedsitters for just a few hundred Kina per month, to lavish homes with stunning views of Ela Beach and beyond to Walter Bay, Port Moresby can accommodate all tastes.
About Port Moresby Real Estate Market
No discussion of real estate in PNG is complete without reference to the country’s unique land tenure system and this especially applies when considering the real estate market of Port Moresby.
PNG’s land tenure system operates under two separate systems which co-exist: customary land title and freehold title. Customary land title recognises the traditional land ownership of the indigenous inhabitants of Papua New Guinea. Customary land is the most prevalent form of land ownership and covers more than 97% of the land mass of PNG. By contrast, freehold title is land that is owned outright by an individual (legally restricted to PNG citizens) and accords with the traditional legal notions of a ‘fee simple’ under English law. Freehold title is extremely limited in PNG with estimates that only 3% of land is privately owned.
How is land title relevant to Port Moresby? Put simply, supply and demand. Port Moresby and its surrounding suburbs and towns are primarily subject to customary land title, meaning that housing supply is limited to locations where developers own freehold land or can secure a long term (99 year) lease from the PNG Government.
Up until 2005 major infrastructure projects were generally located in regional areas outside of the major cities such as Port Moresby and Lae. This meant that the Port Moresby real estate market, whilst active, remained relatively stable with steady demand and supply. Post 2005, the Liquid Niugini LNG (known as the ‘PNG LNG Project’) project commenced with the aim of building a liquid natural gas plant next to the InterOil oil refinery near Port Moresby.
The launch of the PNG LNG project brought about an economic boom in both PNG generally (for example in 2012 real GDP grew by 9.1%) and Port Moresby specifically, with a corresponding spike in migration to the capital. As the city’s population swelled, the demand for housing coupled with limited supply saw a massive price increases both for homes for sale and rental properties. Whilst this spike has been excellent for property investors who have seen huge capital growth driven by very strong rental yields. The price of housing and rentals has resulted in a chronic lack of affordable housing for the average Papua New Guinean.
Hauples recommends selling via a reputable real estate agent and has provided a guide on how to select a PNG real estate.
Port Moresby Real Estate Forecasts for 2015 Onward
Construction of the PNG LNG plant is now drawing to a close with estimates that the plant will be fully complete by the end of 2014 and the project moving to the production phase from 2015 onward. The cessation of the labour intensive construction phase is expected to ease some migration to Port Moresby for PNG citizens and also somewhat reduce the number of expatriates living in the capital, however a phase 2 development could delay that slowdown
The PNG Government has also recognised that the customary land title system has severely limited the supply of development land in cities such as Port Moresby. As such, the Government has commissioned research and launched a range of initiatives to increase people’s access to low and middle cost housing. The National Housing Corporation is one such body which is releasing a large number of homes in and around Port Moresby.
Similarly, the Government is considering other novel ways to improve housing affordability, such as the First Home Ownership Loan Scheme (FHOS) launched in conjunction with the Bank of South Pacific. Under this scheme, the State is partially underwriting loans to first home buyers with low interest rates and very favourable terms, such as: 4% fixed interest rate, 30 year loan term and no penalties for early repayment. FHOS eligibility criteria and application forms can be found here.
The private sector have also ramped up the production of low cost and affordable housing to address pent-up demand with a range of very large developments around the outskirts of Port Moresby. View the latest new housing developments in Port Moresby here.
Finally, there has been anecdotal evidence and commentary from some real estate companies that the Port Moresby real estate market has cooled somewhat throughout mid-2014. However, agents expect rental and sale activity to increase into 2015 with increasing supply from housing developers and the launch of the First Home Ownership Loan Scheme.
Port Moresby Lifestyle
People considering buying or renting Port Moresby real estate will need to acquaint themselves with the various suburbs, towns and amenities available to locals and expatriates alike. In addition, there are some challenges that come with living in this vibrant community, one of which is personal safety. Hausples has produced a comprehensive guide to Life in Port Moresby which addresses these issues and a myriad of other things that any local or would-be local should know.