Mehmood ul Hasan Qadir — Economist & Financial Analyst | Dubai, UAE

The Pakistan Ledger | Opinion

There is no economic problem in Pakistan that is simultaneously so large, so visible, so well-documented, and so consistently inadequately addressed as the housing deficit. Approximately 10 million housing units — conservative estimates reach this figure, while more comprehensive assessments place it at 12–14 million — separate the shelter that Pakistani families have from the shelter they need. Every year, that gap grows. The population is urbanising at approximately 2.5–3% annually. New household formation outpaces new housing construction. And the mortgage market — the primary financing mechanism through which any nation closes a large-scale housing deficit — remains at a development level that would be embarrassing for a country the size of a mid-sized European nation, let alone one of 220 million people.

The PBS Housing Census — What the Numbers Show

Pakistan’s 2023 Housing Census — the first comprehensive housing count in years — confirmed what urban economists had long estimated: the housing deficit is concentrated in urban areas, is most acute in the lower-income segment (housing units below Rs. 3–5 million in value), and is growing fastest in secondary cities experiencing rapid in-migration from rural areas. Karachi, Lahore, Faisalabad, and Rawalpindi together account for a disproportionate share of the formal housing deficit, but the informal settlement growth — katchi abadis, unauthorised subdivisions, peri-urban sprawl — is a national phenomenon that formal housing statistics systematically undercount.

The urbanisation rate projection is particularly alarming. Pakistan’s urban population is expected to reach 50% of total population by the mid-2030s, up from approximately 37–38% today. The cities receiving this in-migration do not have the infrastructure, the housing stock, or the financing mechanisms to absorb it in any orderly way. The result is the visible, human reality of expansion in informal settlements that lack clean water, sewerage, electricity connections, and tenure security — creating poverty traps from which upward mobility is structurally difficult.

The Mortgage-to-GDP Ratio — A National Shame

Pakistan’s outstanding mortgage debt as a percentage of GDP is estimated at less than 1%. India’s is approximately 11%. Bangladesh’s has been growing rapidly from a similar base toward 4–5%. Malaysia’s is over 40%. The US and UK are well above 60%. This comparison is not presented to suggest Pakistan should immediately reach developed-economy mortgage penetration. It is presented to illustrate the extraordinary gap between Pakistan’s housing financing depth and the minimum level that would enable private sector housing construction to scale.

The reasons for Pakistan’s stunted mortgage market are interconnected: land titling is unclear across vast areas of the country, making mortgage collateral legally insecure; foreclosure law is weak and enforcement is slow, reducing lender willingness to extend mortgage credit; property valuation is distorted by the declared versus undeclared value gap that has made Pakistan’s real estate market a primary vehicle for undocumented wealth storage; and household income documentation — essential for mortgage eligibility assessment — is unavailable for the large informal sector workforce that represents the majority of would-be homebuyers.

Mera Pakistan Mera Ghar — Promise and Performance

The Mera Pakistan Mera Ghar scheme, launched under the previous PTI government, was the most ambitious government housing finance initiative in Pakistan’s history. It proposed subsidised mortgage financing at 3–5% markup rates for low-cost housing units, with the government absorbing the margin between concessional and market rates. The uptake numbers, while publicly presented as a success, revealed the structural constraints more than they resolved them. Many applicants who were approved found that developers had not actually built the units being financed; many approved loans could not be disbursed because land title issues made property security legally problematic; and the income verification requirements excluded precisely the informal sector workers the scheme was ostensibly designed to serve.

The Construction Sector Multiplier — What Good Housing Policy Delivers

The economics of housing investment extend well beyond shelter provision. Construction is one of the highest employment-multiplier economic activities available to a labour-surplus economy. Each unit of housing investment generates downstream demand for cement, steel, glass, tiles, sanitary fittings, electrical components, paint, and furnishing — all sectors with significant Pakistani manufacturing presence. Each construction job creates forward linkages into the services economy. Pakistan’s construction sector, when operating at meaningful scale, has the capacity to absorb a significant share of the surplus labour that currently finds no productive formal employment.

A serious housing policy for Pakistan requires land titling reform at scale, mortgage law reform with functional foreclosure mechanisms, a documented income verification framework for informal sector workers, a social housing programme for those below mortgage eligibility thresholds, and construction industry regulation that ensures quality without imposing bureaucratic barriers to legitimate development. None of this is conceptually novel. All of it requires institutional reform capacity that Pakistan’s governance system has consistently struggled to mobilise. Ten million families are waiting. The gap grows. The urgency is not hypothetical.

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Mehmood ul Hasan Qadir is an Economist and Financial Analyst based in Dubai, UAE. He writes on Pakistan’s economic structure, policy failures, and reform pathways for The Pakistan Ledger.