Top 5 Reasons for Housing Shortage in Pakistan

Since the birthday of Pakistan, its real estate has been among the best revenue-producing industries in the country. This industry rarely goes down the hill until and unless there is a significant politics or real estate crisis. It is unfortunate that despite the overwhelming perks of real estate, a housing shortage is an inherent issue of Pakistan, leading Pakistan into the scarcity of approximately 7-lac units every year; only half of this demand is being fulfilled.

The housing shortage is a hanging Sword of Damocles and an opportunity in disguise at the same time. In this blog, Apex Group gathers the top 5 reasons for the housing shortage in Pakistan.

Reasons behind the shortage of housing

Before we initiate shedding light directly on our topic, we first need to get a brief understanding of what housing shortage means. A housing shortage means a lack of available residential units to make room for the residents of a particular area. When the demand for housing projects is higher and the supply is less, it disturbs the market equilibrium, leading to a country's housing shortage.

If supply is more than demand, the market is then a "buyer's market," where purchasers call the shots. Conversely, if there prevails more demand than supply, vendors call the shots, and it is known as a "seller's market." A smart investor purchases property when the market is tortoise-like, and supply is greater and sells when supply is lesser, and the value of a property soars up.

We all know that housing shortage occurs due to the unavailability of required residential projects & units in the market; but, let's discuss what triggers that? Following are the top 5 reasons which would assist you in understanding it.

  • Rampant inflation increasing the prices of construction materials
  • High urban migrations exerting extra pressure on metropolises
  • Population bomb despite all population control measures
  • Unsustainable use of land by cutting the agriculture for housing
  • Triggering unaffordability due to lack of low-cost housing units
  • Negative impacts of the Covid-19 pandemic


Rampant inflation increasing the prices of construction materials

The construction of houses requires material & labour. It is beyond the capacity of an individual with a humble background to build a home in this threatening inflation. The prices of cement and steel are among the few major costs in construction, and the rates are spiking. The other costs include bricks, wood and a major portion involves labour. With the increase in construction material cost, the profit margin of developers and builders has also increased. It eventually increased the prices of houses. Likewise, if someone is constructing the house for themselves, the cost will pass over the budget, and many people cannot afford it.

Finishing and labour costs accumulate to become a huge portion of the total costs when the cost of construction increases, profit margins of builders and developers decrease, which is why buyers anticipate an increase in the prices of built units.

Similarly, if a person builds a home to live there, the cost of construction directly affects their budget, which is why many don't even begin to build. Unless the government provides a subsidy on construction materials, it is extremely difficult for a common person to build a home.

High urban migrations exerting extra pressure on metropolises

One of the top reasons for the housing shortage in Pakistan is the high urban migrations in the metropolises in the wake of a limited number of development opportunities in the rural areas.

The city of colleges, Lahore, has experienced the greatest migrations this decade. As mentioned before, educational facilities in Lahore follow international standards and are far better than other metropolises. The graduates complete their studies and prefer to shift their families here owing to the city's state-of-the-art job and business opportunities. It is how migrations exert extra pressure on metropolises and housings.

Population bomb despite all population control measures

At present, Pakistan ranks at number 5 in terms of population. As per the UN forecasts, Pakistan's population in 2050 will touch the figure of +380 million and surpass the USA, Brazil, Russia, and Indonesia to become the third-largest country globally.

Due to the population explosion, real estate developers are forced to set up housing schemes on the outskirts of the cities. Pakistan is using every population control measure to combat the rising issue, but the increasing population has been exerting serious threats to the housing needs of Pakistan.

Triggering unaffordability due to lack of low-cost housing units

The lack of low-cost housing is the historic failure of Pakistan, but developments add only high-end units. The struggling economy of the country also triggers unaffordability among people.

Referring to the Tribune, Pakistan needs $200 billion to meet the low-cost housing needs. Now, the incumbent Government of Pakistan has launched a flagship project of the Mera Pakistan Mera Ghar Scheme to build low-cost houses for the poor segment of the country. It will break the chain and provide the general mass with equal opportunities to afford and build their own houses.

Negative impacts of the Covid-19 pandemic

The outbreak of Covid-19 has had serious repercussions on the overall economy of Pakistan. Predominantly, the pandemic has affected the poor and middle-class segments the most.

Before Covid-19, only underprivileged people were unable to buy low-cost housing units. But now, the middle class are also out of pocket. In the wake of Covid-19, PM Imran Khan introduced a historic Construction Package to help Pakistanis in this worst time. What needs now is the smooth functioning of the scheme on the part of the administration to provide the actual people with the actual low-cost housing units.

For more information and safe investments, contact Apex Group.

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