Lahore: Real estate demand and property prices have increased across several major Pakistani cities in recent weeks, with market observers linking the trend to renewed investor confidence, geopolitical uncertainty in the Middle East, lower taxes on property transactions and the government’s subsidised housing finance initiatives.
According to industry observers, residential property prices have risen by around 10% to 15% in key markets, particularly Karachi, Lahore and Islamabad, as local and overseas investors return to the property sector.
Experts said ongoing geopolitical tensions in the Middle East have encouraged some investors to diversify their portfolios and redirect funds towards Pakistan’s real estate market. Lower transaction taxes have also improved the attractiveness of property investment for buyers.
The increase in demand has been particularly visible in established and high-end localities, where limited housing supply has contributed to upward pressure on prices. Investors continue to view property as a relatively stable long-term investment option amid uncertainty in regional markets.
The government’s subsidised housing finance programme has also contributed to rising demand, particularly among middle-income and first-time buyers. The scheme has made home financing more accessible to eligible households seeking to purchase residential properties.
Under the Finance Act 2025-26, the federal government reduced withholding taxes on property transactions. For tax filers, the withholding tax on property purchases was lowered from 2.5% to 1.25%, while the rate on property sales was reduced from 5.5% to 2.75%.
Karachi, Lahore and Islamabad See Strong Demand
Karachi has recorded a notable increase in property prices amid strong demand and a limited supply of new housing projects. Buyers in the city are increasingly showing a preference for completed residential units over newly launched developments.
In Lahore and Islamabad, investor activity has remained strong in developed housing schemes and high-rise residential projects. First-time buyers are also increasingly turning to the government’s Apna Ghar housing finance programme, which enables eligible households to purchase homes through bank financing.
According to State Bank of Pakistan data, banks have so far 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 150,000 beneficiaries under the programme during the current fiscal year.
Industry Calls for More Housing Support
Real estate industry stakeholders have called for additional measures to support builders and developers, including improved access to bank financing and policies aimed at encouraging the development of new residential projects.
They said increasing the supply of housing could help address Pakistan’s estimated shortage of around 12 million housing units, while also creating employment and stimulating economic activity across construction and related industries.
Market participants believe that sustained demand, easier housing finance and a more favourable tax environment could continue to support Pakistan’s real estate sector, provided new housing supply keeps pace with buyer demand.
