Pakistan Faces Housing Crisis as Demand Skyrockets

Pakistan faces a shortfall of over 12 million houses as demand rises following a decline in key lending rates which typically encourages individuals to park their money in real estate instead of banks. Builders and developers believe reviving housing and construction could generate employment and boost over 70 allied industries, reported a news daily. Chairman Association of Builders and Developers (ABAD) recently said Prime Minister Shehbaz Sharif appreciated their proposals but does not want speculative trading in property. The premier has asked for revised suggestions within 10 days and is keen to support low-income housing, the chairman added. The ABAD chairman noted that prices in Pakistan remain half of those in the Middle East despite the cement industry operating at only 30 percent capacity. He urged long-term subsidized financing as done by the previous government. During 2018-2022, over 31,000 houses were financed at fixed subsidized rates. Banking experts think this isn’t feasible for large-scale financing, as mortgage lending remains underdeveloped in Pakistan. While home financing could enable buyers to pay in installments similar to rental costs, banks are hesitant due to the high risk of default. Banks still remain reluctant to engage in long-term housing loans.