Pakistan Targets 5% Mortgage Finance Share of GDP by 2035

The government has proposed raising mortgage financing to 5% of gross domestic product (GDP) by 2035, from the current level of below 0.5%, while targeting the construction of 300,000 to 400,000 housing units each year, the Planning Ministry said on Wednesday.

The proposals were presented by Planning Commission Member Waqas Anwar at the eighth meeting of the National Economic Mission under the Uraan Pakistan framework, chaired by Planning Minister Ahsan Iqbal.

The proposed reform framework for the housing, construction and real estate sectors also includes plans to digitise land records, construction permits, property valuations and transfer processes by FY2029.

It further calls for a one-window system for construction approvals, incentives tied to verified construction milestones and secure escrow arrangements for property transactions.

Participants were informed that Pakistan currently faces annual housing demand of approximately 700,000 units, while supply stands at around 250,000 units, resulting in an estimated yearly shortage of 450,000 homes.

Figures presented during the meeting showed that Pakistan’s urban population rose from 76 million in 2017 to approximately 94 million in 2023.

The presentation noted that the construction sector supports 72 related industries and contributes around 9.5% of total employment in the country.

Ahsan Iqbal said housing and construction would play a significant role in Pakistan’s ambition to develop a $1 trillion economy and stressed the need for increased participation from the private sector.

He also emphasised vertical development as a way to reduce pressure on agricultural land as cities continue to expand rapidly.

According to figures presented at the meeting, built-up areas expanded between 2005 and 2022 by 104% in Islamabad, 72% in Quetta, 59% in Lahore, 44% in Peshawar and 43% in Karachi.

Iqbal also advocated wider adoption of modern construction technologies and called on Pakistani construction companies to expand into international markets to generate exports, attract investment and increase foreign exchange earnings.