ISLAMABAD: In partnership with commercial banks, the federal government is in the final stages of launching a major subsidised housing initiative aimed at the lower-income segment, alongside affordable mortgage facilities for the middle class. The plan will initially feature the construction of 200,000 low-cost housing units backed by public sector funding.
Prime Minister Shehbaz Sharif will officially unveil the scheme soon to revive the struggling housing and construction sector—an industry linked to around 72 other economic sectors, according to sources familiar with the development.
Under the proposed plan, the government will offer 3-5 marla housing units at a 50% financing subsidy, with the intent to scale the program over time. A draft of the scheme has already been presented to the State Bank of Pakistan (SBP) and commercial banks for review.
A high-level meeting chaired by Planning Minister Ahsan Iqbal was held on Monday to explore sustainable models for affordable housing finance. Participants included SBP Governor Jameel Ahmed, CEOs of public and private banks, and representatives from the Pakistan Mortgage Refinance Company (PMRC).
The SBP and commercial banks requested one week to provide detailed feedback. Two implementation options are being considered: either provide individuals with subsidised loans to build their own 3-5 marla houses or construct the units through public funding and offer them to beneficiaries on subsidised mortgage terms. A follow-up meeting is scheduled for next week.
Participants acknowledged the country’s deepening housing crisis, with a current shortfall of 12 million units and an annual supply-demand gap of around 450,000 homes. The deficit disproportionately affects lower-income groups, accounting for 65% of the unmet need, followed by 25% in the lower-middle-income segment and 10% in the upper-middle-income group.
The housing challenge was described as “paradoxical”—while the demand side suffers from affordability issues, limited mortgage access, and a young population (64% under age 30), the supply side faces high costs of land and materials, regulatory constraints, and low profitability for developers due to high interest and tax rates.
International housing finance models from countries such as Singapore, South Africa, Turkey, Bangladesh, Brazil, and India were reviewed as part of efforts to tailor a sustainable solution for Pakistan’s socio-economic context.
Minister Iqbal stressed that the absence of long-term housing finance is one of the biggest barriers to resolving Pakistan’s housing crisis. He recalled the progress made in the 2017–18 period, which was disrupted by political instability. “When there’s no policy continuity, the public pays the price,” he remarked.
Drawing parallels to successful auto-leasing models, he questioned why similar financing mechanisms couldn’t be adopted for housing. “Millions live their entire lives in rented homes. Owning a house should not be a distant dream for the salaried class,” he said, adding, “A home worth two to three crore rupees cannot be financed through lump-sum payments by the average citizen.”
