Construction Growth Reaches 19.2% as Rs10m Subsidised Housing Loans Lift Pakistan’s Property Market

KARACHI: Pakistan’s construction sector has grown sharply over the past year. Builders credit the government’s subsidised housing finance scheme, even as banks remain cautious about lending.

The State Bank of Pakistan reported that construction growth, which stood at negative 3.3 percent in the first quarter of FY25, rose to 17.6 percent in the fourth quarter of that year. It reached 19.2 percent in the first quarter of FY26, and the first half of FY26 recorded 14.6 percent. Public Sector Development Programme spending increased 41.8 percent in the same half, against a 1.1 percent decline a year earlier.

The Prime Minister’s Ghar Ho Tu Apna scheme, launched in September 2025, offers loans of up to Rs10 million at a fixed five percent rate, with the government paying the markup subsidy. Hassan Bakhshi, chairman of the Association of Builders and Developers, said the scheme has provided liquidity and revived purchasing. Some builders have recovered capital tied up in unbooked apartments.

Banks, however, have issued fewer loans than expected. Bakhshi said lenders require complete documentation, while many owners begin construction without proper design or approval from the Sindh Building Control Authority, making their projects ineligible.

The US-Iran war has also changed investment patterns. Bakhshi said money that would have gone to Dubai property is now being invested at home, which pushed prices in areas such as Defence Society up by as much as 60 percent. He added that a correction of up to 20 percent has been recorded in Defence over the past month.

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Sources:

• DAWN

Saleha Ali

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