Ayesha Saba

The government needs to urgently introduce an affordable, low-cost housing finance scheme to revitalise the construction sector, stimulate economic activity, and attract foreign direct investment.

"Lack of accessible financing options for low- and middle-income groups remains one of the most critical bottlenecks to inclusive urban development in Pakistan,” pointed out Imran Qureshi, an urban economist at Sustainable Development Policy Institute.

Speaking to WealthPK, he said with a rapidly growing population and rising demand for residential units, the housing deficit has now surpassed 10 million units — a gap that continues to widen each year due to underinvestment and limited mortgage penetration. He argued that the government’s current housing policies fall short of incorporating the practical financial tools needed to achieve large-scale impact.

Qureshi pointed out that in the absence of long-term and low-interest mortgage products, especially for low-income households, private sector developers also show little interest in constructing low-cost housing, as there is no assured purchasing capacity in the market.

He said that a well-structured housing finance scheme — ideally backed by government guarantees and concessional financing through commercial banks —would not only increase home ownership among underserved segments but also create a ripple effect across 40 allied industries such as cement, steel, and construction materials.

He also highlighted the scheme’s potential to attract FDI into real estate and infrastructure, provided the regulatory environment ensures transparency and ease of doing business. “Countries like Turkey, Malaysia, and Indonesia have successfully leveraged low-cost housing programmes to spur urban growth and attract international investors,” he said.

He added that Pakistan could do the same if it introduced innovative public-private partnership models, land reforms, and digitised property registration systems to minimise corruption and land disputes. Qureshi emphasised that affordable housing doesn’t just address a social need, it drives construction, deepens capital markets through mortgage expansion, and reduces informal settlements that strain urban infrastructure.

Minister for Planning, Development and Special Initiatives Ahsan Iqbal has emphasised the need for developing sustainable and affordable housing finance schemes. He said a lack of long-term housing finance was a major obstacle to affordable housing in Pakistan, and proposed a mortgage-backed model similar to auto-leasing, supported by strong government policy.

Iqbal assured private banks of full government backing, including 100% guarantees to safeguard their capital, and encouraged them to adopt market-based housing finance models. The minister also recommended targeted subsidies for smaller units, such as three-marla homes, while allowing banks flexibility in designing financing frameworks for larger properties.

Credit: INP-WealthPk