New Govt-Backed Housing Finance Initiative Aims to Revitalize Real Estate

The federal government plans to introduce a new subsidized housing finance scheme in the fiscal year 2025–26 aimed at enhancing homeownership opportunities for low- and middle-income households while stimulating activity in Pakistan’s real estate and construction sectors.

As per the proposed budget, a Rs5 billion subsidy will support the initiative through partial markup reductions, making borrowing more affordable for eligible applicants. The State Bank of Pakistan (SBP) is set to administer the program, which comes in the wake of the discontinuation of the Mera Pakistan Mera Ghar scheme in 2022.

Officials confirmed that the final structure, eligibility criteria, and official title of the scheme are still under discussion. Though the declining policy rates offer a conducive environment for its launch, experts caution that the scheme’s success will hinge on robust institutional mechanisms, improved taxation frameworks, and increased public awareness.

With Pakistan’s mortgage-to-GDP ratio still under 1%—one of the lowest in the region—the lack of a widespread mortgage infrastructure remains a significant barrier. Real estate professionals believe the new scheme could help absorb unsold inventory in existing housing developments and generate employment across allied industries. Additionally, they suggest that falling interest rates and tax incentives on property transactions may attract both local buyers and overseas Pakistanis.

Reflecting on the previous housing finance initiative introduced in 2019, a realtor noted that although it attracted Rs514 billion in applications, only Rs235 billion was disbursed due to high interest rates and limited banking outreach. Nonetheless, the program laid critical groundwork by building institutional capacity and systems for housing finance.

Pakistan currently faces a housing deficit of approximately 1.2 million units. Realtors argue that with the right mix of tax relief and regulatory support, the upcoming scheme could promote high-density residential projects in urban centers and facilitate homeownership for first-time buyers.