Urbanization, Housing Supply, and the Credit Gap in Pakistan
Pakistan is on track to become the world’s third most populous country by 2100. That trajectory is being shaped largely by cities — urban areas are growing at 3.65% annually, nearly twice the rural rate, and the housing system is not keeping pace.
The country needs roughly one million new units every year. It is not producing them — certainly not at a price point accessible to most households. And the financing that should bridge that gap remains one of the shallowest in the region. Mortgages account for just 4% of private sector credit, and more than half of that goes to bank employees rather than the public.
The government’s latest subsidised mortgage scheme, Mera Ghar Mera Ashiana, has been revived and expanded. But its predecessor managed to disburse just 19% of what was applied for — not because of insufficient funds, but because eligible housing stock simply did not exist.
KSBL InsightLab’s latest policy brief maps Pakistan’s housing crisis in full: the urbanization data that official classifications are missing, the mortgage market structure that leaves most Pakistanis without access to formal finance, and the price and rental trends that show where the pressure has gone.