Catch the Pulse of Pakistan’s Housing Market

May 10, 2022 nsktareen 0

Real estate is a major and growing industry in Pakistan, and Pakistan spends $5.2 billion on construction. Despite the improvement, we have seen many people in Pakistan still lack primary living facilities, i.e. houses. It thus clearly demonstrates that there is a great need for growth in the real estate market so that all sources of income can afford the need for life.

The State Bank of Pakistan (SBP), in its report on ‘The State of Pakistan’s Economy’, recently noted that the combined contribution of the construction and housing sectors “has been consistently higher than nine-percent over the past decade”. Reason for the growth are:

Population Growth
Urbanization
Deformation of Family System

Pakistan’s real estate state has made a major contribution to its economic development. According to the World Bank calculation, the size of the country’s real estate assets is between 60 and 70 percent of the country’s total wealth; if these figures are extended to Pakistan, the approximate size of the real estate sector is between $300 and $400 billion

Fast Facts About Housing Market of Pakistan

Roughly 30-35% of the country’s employment is directly or indirectly affiliated with the construction
Only 32 million houses have been built in Pakistan since 1947
Demand of annual housing of around 700,000, out of which only 50 percent is met every year
1% of housing units developed annually cater to 68% of Pakistan’s total population-(people who earn a monthly income of Rs 30,000)
56 percent of housing units target 12 percent of the population, comprising individuals with a monthly income of Rs 100,000 and above
Asia’s lowest at 0.25 percent mortgage finance to GDP ratio, with a 3.4 percent regional average; around 3 percent in Bangladesh and 11 percent in India. The SBP estimates that the house price to income ratio is 20:1 in Pakistan (compared to a global average of 5:1)
Increased levels of urbanization and migration have resulted in the development of second-tier city centers.

Since 2011, according to estimates, the prices of plots in Pakistan have nearly tripled, whereas house prices have surged by 139%. Experts identify this market dynamic as having been fueled by intensive speculation. They say that investors in Pakistan treat real estate as a commodity: property is purchased in bulk, and later sold for higher gains.

Family Size & Types of Housing – Featured

Large Family Size – Future High Potential for the Housing Market

Family Size	Total	Female	Male
SINDH	5.6	2.7	2.9
ISLAMABAD	6.0	2.8	3.1
PUNJAB	6.4	3.2	3.3
PAKISTAN *	6.5	3.1	3.3
BALOCHISTAN	7.0	3.3	3.7
KHYBER PAKHTUNKHWA	7.9	3.9	4.0
FATA	9.0	4.4	4.6

Market prices of Residential property in Pakistan (source: Zameen, 2019)

PKR – Price per m2 in – (Land & Construction)

Year	Islamabad	Rawalpindi	Faisalabad	Karachi	Lahore	Multan
2011	21,743	23,885	16,609	47,738	23,595	46,554
2012	24,456	28,105	17,793	62,409	28,772	47,964
2013	36,005	38,330	18,514	87,198	40,214	53,960
2014	38,782	41,194	18,751	96,821	45,467	57,286
2015	39,191	41,194	22,561	113,527	50,407	61,796
2016	42,787	41,312	23,864	127,660	55,897	62,388
2017	40,645	42,485	22,873	139,802	56,683	65,369
2018	42,453	36,737	26,070	136,282	59,923	67,113
2019	45,951	48,890	26,802	130,469	61,613	73,840
2020	48,534	51,258	31,743	133,569	64,788	79,179

Appropriate for a diligent investor

The new real estate market is very appropriate for a diligent investor. It’s not all gloom and doom in the plots market, as DHA Peshawar has doubled and in some cases, tripled the investment in two years and is currently at an all-time high. Similarly, investment in DHA Lahore has been bottom-up and is a lucrative opportunity if you want to invest in property. Besides this DHA Multan offer a great opportunity to invest in plots, it may not be as large as DHA Peshawar, but it will definitely be a region that will see a potential increase in 2021 and 2022.

Factors Impacting Housing prices in Pakistan.

Rate of risk-free return	Capital value tax
Buyer’s profession	Stamp duty
Housing scheme repute	Corruption level
Sector development	Withholding tax
Transfer fee	Capital gain tax
Widening gap	Market sentiment