Pakistan’s construction sector has shown a strong recovery over the past year, with subsidised housing loans helping revive property demand and improve liquidity in the market. Builders say the government’s housing finance initiatives are making homeownership more accessible to middle-income families, although banks continue to follow strict lending requirements.
According to Hassan Bakhshi, chairman of the Association of Builders and Developers (ABAD), the Prime Minister’s housing scheme offers loans of up to Rs10 million on affordable instalments, providing much-needed financial support to homebuyers and developers. The initiative has also helped builders recover funds tied up in unsold apartments.
The Ghar Ho Tu Apna scheme, launched in September last year, provides housing finance at a fixed interest rate of 5%, with the government covering the markup subsidy. The scheme has encouraged buyers to return to the property market despite rising construction costs and high property prices.
However, loan disbursements have been slower than expected because banks require complete documentation and approved building plans. Projects without the necessary approvals from the Sindh Building Control Authority may not qualify for financing, highlighting the importance of regulatory compliance for applicants.
State Bank of Pakistan data reflects the sector’s recovery. Construction growth improved from -3.3% in the first quarter of FY25 to 17.6% in the fourth quarter, reaching 19.2% in the first quarter of FY26. The central bank also attributed some of the growth to a 41.8% increase in Public Sector Development Programme spending during the first half of FY26.
Meanwhile, changing investment trends amid the Gulf conflict have reportedly redirected some property investment towards Pakistan. According to Bakhshi, property prices in Karachi’s Defence area increased by as much as 60%, although they subsequently corrected by up to 20% over the past month.
Industry representatives believe that continued growth in construction could benefit more than 70 allied industries, supporting employment and wider economic activity. With Pakistan facing a housing shortage of up to 10 million homes and construction costs rising significantly over the past five years, affordable housing finance remains essential.
For prospective homebuyers, completing all required paperwork and obtaining an approved building plan are key steps towards securing subsidised housing loans and benefiting from government-backed financing programmes.
