Federal Government to Launch New Subsidized Housing Finance Scheme for Low and Middle-Income Groups

KARACHI: The federal government is planning to introduce a new subsidized housing finance scheme in the upcoming fiscal year aimed at increasing demand in the real estate and construction sectors while making home ownership more accessible for low and middle-income groups.
The scheme, inspired by the earlier “Mera Pakistan Mera Ghar” initiative, is expected to face several challenges including uncertainty regarding eligibility and structure, high land and construction costs, and limited financial capacity of the targeted beneficiaries.
Currently, the mortgage-to-GDP ratio in Pakistan is less than one percent, raising concerns over the willingness of banks to lend aggressively under the program, despite the allocation of Rs 5 billion in subsidies in the federal budget for 2025–26.
Experts warn that without institutional coordination, tax reforms, and public awareness campaigns, the scheme may struggle to achieve its objectives. The initiative will be launched under the supervision of the State Bank of Pakistan and will offer subsidized markup rates to ensure installment payments remain affordable for borrowers.
However, the eligibility criteria, types of housing units, structure, and name of the scheme may differ from the previous one.
Ibrahim Amin, a real estate valuation and engineering expert, noted that the government’s decision is backed by gradual reductions in the policy rate and improving economic indicators. He added that the scheme could revive economic activity in the construction and real estate sectors and attract investment from both local and overseas Pakistanis.
Renowned Karachi-based realtor Moazz Luqman highlighted the housing shortfall of 1.2 million units in Pakistan and the extremely low mortgage-to-GDP ratio compared to the region. He emphasized that high land and construction costs have slowed the booking of small and mid-sized apartments in recent years. The new subsidized scheme, he believes, will also provide much-needed support to builders and developers.