Khyber Pakhtunkhwa (KP) faces a severe housing crisis driven by poor civic facilities, prolonged power outages in rural areas, rapid population growth, soaring property prices, and inflation. The province requires an estimated 2.5 million additional housing units over the next 14 years to meet demand, with about 2.5 houses needed for homeless and underprivileged individuals in urban areas. As Pakistan's population surpasses 245 million, the demand for affordable housing has reached critical levels.
Affordable Housing Challenges for Low-Income Groups
The housing shortfall disproportionately affects salaried employees, pensioners, and marginalized communities, who find themselves increasingly priced out of the market. Job scarcity, rising land costs, poverty, and limited economic opportunities in KP have turned the dream of affordable housing into a harsh reality for many poor families. Despite government economic strides, addressing the housing shortfall remains a formidable task.
Officials acknowledge the urgency, but progress is hindered by inadequate infrastructure, unemployment, and limited financial resources. Professor Dr. Naveed Farooq of Abdul Wali Khan University Mardan stated, "Affordable housing is the fundamental right of all citizens in KP where rapid population growth, fast migration from rural to urban areas, high construction and land cost factors have largely contributed to houses backlog." He noted that globally, governments have attempted alternative approaches by providing affordable housing at urban peripheries, encouraging relocation to areas where land is cheaper.
Rapid Urbanization and Agricultural Land Loss
Dr. Naveed highlighted that rapid urbanization has converted fertile agricultural land into unplanned towns and societies in KP, particularly in Peshawar, Mardan, Abbottabad, Swat, Kohat, DI Khan, and Nowshera districts. The current demand for new housing units is growing at 600,000 houses per year, and adding 0.5 million more houses would require 1.1 million units annually to clear the existing backlog of 10 million houses over 14 years.
In Peshawar, housing problems are expected to worsen as the urban population reached 1.970 million and is estimated to rise to 2.80 million by 2030, consuming more agricultural land. As a result of the housing shortage, the price of a five-marla house in Peshawar has crossed Rs10 million, with rents reaching Rs40,000, beyond the purchasing capacity of common citizens and low-paid employees.
Government Initiatives and Criticisms
Wajid Ali, former environment minister, criticized the previous PTI government for failing to fulfill promises of constructing five million houses, stating that poor housing policies increased the housing problem and property prices in KP. To boost affordable housing, the federal government has introduced a new markup subsidy and risk-sharing scheme for affordable housing finance, benefiting KP residents. The scheme covers the purchase of houses, flats, and plots, as well as construction on already owned land, with loans available for housing units up to 10 marla or 1,500 square feet flats.
The federal government has announced a maximum loan size of Rs10 million with a flat 5% customer/end-user fixed pricing under the landmark Prime Minister’s Housing Programme. According to the Provincial Housing Authority (PHA), a survey under the Naya Pakistan Housing Programme revealed that five million houses of five marla are immediately required in Pakistan, including 750,000 in KP. Approximately 262,500 kanal of land is needed for these units in KP, with Peshawar requiring 104,897 houses, Mardan 58,309 houses, and Swat 65,749 houses.
Ongoing Projects and Future Plans
Under a joint venture between PHA Foundation and the KP government, 8,000 low-cost housing units in the first phase will be constructed at Surizai, Peshawar. The Danigram project in Swat, covering 70 kanal, has been completed with quotas allocated for widows, persons with disabilities, and media professionals. The feasibility study and design of a new Peshawar housing project will soon be completed, and its preliminary zoning plan has been prepared. Deputy commissioners of Peshawar and Nowshera have completed verification of 6,571 kanal of land.
In the federal budget 2026-27, the government provided incentives to the construction and housing sectors with greater fund allocation and income tax relief. The new tax regime revises rates: old withholding tax applicable on buyers was 2.5%, now reduced to 1.25%; old withholding tax applicable on sellers was 5.5%, now reduced to 2.75%. This measure also eliminates the deemed income tax on immovable properties, which was previously controversial.
