Property demand, prices surge across Pakistan’s major cities

Demand for real estate and property prices has been rising steadily across Pakistan’s major cities, driven by renewed investor confidence, ongoing geopolitical tensions in the Middle East, the government’s low-markup housing finance scheme, and recent reductions in taxes on property transactions, it was learnt.

Market observers said residential property prices have increased by an estimated 10% to 15% in recent weeks, particularly in Karachi, Lahore and Islamabad, as buyers and investors return to the domestic real estate market.

Ibrahim Amin, Chairman of TriStar International, a real estate valuation company, said the ongoing geopolitical tensions in the Middle East, coupled with the government’s decision to reduce taxes on property transactions, have encouraged both local and overseas Pakistanis to invest in the domestic real estate market.

“The crisis in the Middle East has prompted many investors to diversify their portfolios and shift investments to Pakistan’s real estate sector, which continues to offer attractive returns and relatively affordable investment opportunities,” he said.

According to Mr Amin, residential projects in Defence Housing Authority (DHA) and other high-end localities have witnessed a notable increase in demand amid limited supply, resulting in higher property prices. He said investors view Pakistan’s real estate market as a relatively secure long-term investment compared with several regional markets.

Amin added that the government’s flagship housing finance programme has also stimulated demand among middle-income buyers by making home ownership more affordable through subsidised financing.

Under the Finance Act 2025-26, the federal government significantly reduced withholding taxes on property transactions to revive the construction and real estate sectors. The withholding tax on property purchases for tax filers was reduced from 2.5% to 1.25%, while the tax on property sales was cut from 5.5% to 2.75%.

Maaz Liaquat, a real estate consultant, said demand for residential plots, houses and apartments, as well as commercial properties, has risen considerably over the past few weeks.

He noted that property prices, particularly in Karachi, have increased sharply because of strong demand and a limited supply of new housing projects. Buyers, he said, are now showing greater preference for completed housing units rather than investing in newly launched residential schemes or plots.

In Lahore and Islamabad, investors are increasingly purchasing properties in large housing developments and high-rise residential projects. At the same time, many first-time buyers are taking advantage of the Prime Minister’s Wazir-e-Azam Apna Ghar Programme to purchase homes in the suburban areas of these cities through bank financing.

According to State Bank of Pakistan (SBP) data, commercial and microfinance banks have received around 107,000 applications under the housing finance scheme. Of these, approximately 27,000 applications have been approved, 13,000 rejected, while the remaining applications are under review.

The government aims to facilitate 150,000 beneficiaries under the programme during the current fiscal year. Eligible applicants can obtain financing of up to Rs10 million to purchase a house, apartment or plot, or construct a home on land they already own.

Industry stakeholders urged the government to further facilitate developers and builders through improved access to bank financing and supportive policies to accelerate the launch of new residential projects. They said expanding housing supply would help address Pakistan’s estimated housing shortage of around 12 million units while generating employment and stimulating economic activity in allied industries.