KARACHI: Although banks are not ready to extend housing loans to applicants without complete documentation, builders are almost unanimous that the sector had picked up over the last 12 months.

According to them, the Prime Minister’s housing scheme, which provides loans of up to Rs10 million on easy instalments, has stimulated the construction industry.

“Most people can’t buy even an apartment since the purchasing price is out of reach of the middle class. The housing sch­eme has provided liquidity and purchasing has picked up,” according to Hassan Bakhshi, chairman of the Association of Builders and Developers (Abad).

The country has been facing a shortage of houses while the cost of construction has gone up many times over the last five years. According to an estimate, the country requires up to 10 million houses at a time when 48 per cent of Pakistanis are living below the poverty line.

Banks wary of giving loans as most projects are illegal

A builder said that after release of liquidity for housing schemes, a number of people in the business have been able to recover their investments stuck in apartments that were not booked earlier as people had no money.

“Banks have not issued loans as much as we were expecting, but they have some real issues,” said Mr Bakhshi. “Banks don’t issue loans unless documentation is complete.”

“Most people start work on their homes without a proper design and approval of the Sindh Building Control Authority. Banks don’t consider these projects for loans,” he added.

Hassan Bakhshi was, however, hopeful that the construction industry would soon pick up and it would, in turn, jumpstart over 70 allied industries.

He said outflow of money from Pakistan to Dubai for purchase of property has declined as buyers divert their cash into real estate at home.

The growth in construction during the six quarters from FY25 to FY26 was amazing, shooting from a negative growth to as high as 19.2pc.

The State Bank recently reported that the growth rate of the construction industry was negative 3.3pc during the first quarter of FY25, but it shot up to 17.6pc in the fourth quarter of the same fiscal year.

The growth rate in the first quarter of FY26 was 19.2pc, while the first half of the same fiscal year recorded growth of 14.6pc.

Apna Ghar Programme

The prime minister’s Ghar Ho Tu Apna scheme, launched in September last year, created demand for housing. The scheme offers subsidised financing at a fixed rate of five per cent, with markup subsidy paid by the government.

According to an SBP report, construction activity had picked up pace following “some favourable developments”. The Public Sector Development Programme spending grew by 41.8pc in the first half of FY26, compared to a decline of 1.1pc in the corresponding period of last year.

Prices of construction material have fallen considerably. But builders deny that prices have come down.

Correction in prices

Dubai, the most attractive place for buying and selling properties, lost its charm with the outbreak of the US-Iran war. Investors feel their liquidity in Dubai is stuck while the future is uncertain.

Since the outflow of money for investing in Dubai properties has suddenly stopped, people flush with cash found it prudent to invest in real estate at home, which pushed up property prices in areas like Defence Society by up to 60pc.

“The dust has settled now and a correction of up to 20pc in prices of properties in Defence has been noted over the last one month,” said Mr Bakhshi.

Property prices have risen in almost all areas in Karachi, which serves as a barometer for the entire country, because people find no other alternative in the midst of the Gulf war.

Published in Dawn, October 23rd, 2026