Lahore: Real estate demand and property prices have increased in several major cities across Pakistan in recent weeks, as renewed investor confidence, lower property transaction taxes, geopolitical developments in the Middle East, and government-backed housing finance programmes influence market activity.
Market observers estimate that residential property prices have risen by around 10% to 15% in recent weeks, particularly in Karachi, Lahore, and Islamabad. The increase has been linked to a return of buyers and investors to the domestic property market.
Experts said ongoing geopolitical uncertainty in the Middle East, combined with reduced taxes on property transactions, has encouraged both local and overseas Pakistanis to reconsider property as part of their investment portfolios. Some investors are reportedly shifting funds toward Pakistan’s real estate sector as they look for longer-term investment opportunities.
Demand has been particularly noticeable in established and high-end areas where the supply of residential properties remains limited. Industry observers said the combination of limited availability and stronger buyer activity has contributed to upward pressure on prices.
Karachi has recorded increased property demand amid a shortage of new housing projects, with buyers showing stronger interest in completed residential units. In Lahore and Islamabad, investors are reportedly focusing on developed housing schemes and high-rise residential projects.
Government housing finance initiatives are also contributing to market activity. The Apna Ghar housing finance programme has helped make homeownership more accessible to eligible middle-income buyers through bank financing.
According to State Bank of Pakistan data cited in reports, banks have approved around PKR 204 billion in housing finance under the Prime Minister’s Apna Ghar Scheme, while approximately PKR 27 billion has already been disbursed. The government has set a target of facilitating around 150,000 beneficiaries during the current fiscal year.
Changes in property taxation have also played a role in improving market sentiment. Under the Finance Act 2025-26, withholding tax on property purchases for tax filers was reduced from 2.5% to 1.25%, while the tax on property sales was reduced from 5.5% to 2.75%.
Industry stakeholders have called for additional measures to support builders and developers, particularly improved access to bank financing and policies that encourage the development of new housing projects.
They said increasing the supply of residential properties could help address Pakistan’s estimated housing shortage of around 12 million units, while also generating employment and supporting industries connected to construction and real estate.
With demand strengthening across major urban markets, industry participants will be watching whether the recent rise in property activity develops into a sustained recovery. Continued infrastructure development, housing finance availability, taxation policies, and new housing supply are likely to remain important factors shaping Pakistan’s real estate market in the months ahead.
