The microstate of Palau faces several obstacles on the path to housing security and affordability. Still, there have been successful efforts towards this goal and in preventing homelessness in Palau.

Challenges to Palau

Palau faces numerous challenges to its socioeconomic stability. The COVID-19 pandemic presented setbacks to the country’s economy, one that centers largely on tourism. According to the Palau government’s Development Plan for 2023-2026, rising costs of construction materials and an unequal growth between incomes and housing prices make it harder to afford a home in Palau, especially amidst high demand. Additionally, land disputes resulting in displacement complicate matters of housing security.

Micronesian states like Palau are also highly vulnerable to natural disasters and the impacts of changing weather, including rising sea levels and extreme weather events. This is innately threatening to economic and housing stability, as changing weather patterns and homelessness have innate links.

Successes and Setbacks

According to the 2015 Pacific Regional MDG tracking report, there are no recorded informal settlements or squatters in Palau. This can indicate a lack of a significant homeless population in the state.

There are several programs and efforts to maintain access to affordable housing and prevent homelessness in Palau. Organizations like the Palau Housing Authority (PHA) and Housing Development Loan Program (HDLP) work to support those struggling to afford housing.

 The Palau Housing Authority (PHA) provides low-income housing for families in Palau. According to the Island Times of Palau, last year the PHA was able to supply two home renovations and six new homes with $500,000 from the state’s supplemental budget. However, the PHA hopes for consistent annual funding from the Palau government in order to meet increasing demand for affordable housing. As of March 2025, the organization is facing financial shortfalls and struggling to repay loans amid increasing repayment costs. The organization has requested funding from numerous sources, including the Palau government, as well as the United States Department of Agriculture.

The Housing Development Loan Program is a $15 million program that originated in 2019 as the Palau government’s response to the worsening housing crisis in the state. According to the Island Times of Palau, this program resulted in the purchase of 36 homes as of 2020. Of the 36, two were displaced persons. Several states in Palau have requested funds for infrastructure for necessities like roads, power and water, that will allow for further housing projects to be completed.

Palau in a Global Context

Statistics for countries worldwide indicate Palau does relatively well in terms of human development and poverty rates, which suggests low rates of homelessness in Palau. While considered a developing country, Palau is upper-middle-income, according to the U.N. Micronesia Palau National Study. According to UNICEF, data estimates from 2006 indicate approximately 25% of the population in Palau lives below the national poverty line. This is significantly lower than the countries hardest hit by poverty, including South Sudan with a rate of 82%, according to the World Bank.  

The Human Development Index (HDI) is a measure for progress in major areas of human development, including a decent standard of living. According to U.N. Human Development Reports, Palau’s HDI score of 0.786 ranks it high amongst countries around the globe. While it rose steadily since the year 2000, it decreased in the years following 2019. This is likely in part due to challenges posed by the COVID-19 pandemic, which had adverse impacts on Palau, a country whose economy relies heavily on tourism. The HDI score has remained steady since 2022.

– Emma Kelsey

Emma is based in St. Paul, MN, US and focuses on Good News and Global Health for The Borgen Project.

Photo: Wikimedia Commons