Rapid urbanization, demands for better civic facilities puts housing sector under strain in Khyber Pakhtunkhwa
PESHAWAR (APP): The poor civic facilities and long hours loadsheding in rural areas have put extra presures on the housing sector in Khyber Pakhtunkhwa.
The rapid rise in population, combined with soaring property prices and inflation, has exacerbated the housing problems for low-income groups in urban areas of KP where about 2.5 houses are required for homeless and underprivileged.
As Pakistan’s population surpasses the 245 million mark this year, the demand for affordable housing reached high levels in KP, with an estimated 2.5 million additional units needed in the province alone over the next 14 years if current growth rate persist.
The affordable houses challenges are particularly acute for those in the salary, pensioners class and marginalized communities, who find themselves increasingly priced out of the housing market.
Squeezing of jobs, rising land costs, poverty and limited economic supply in KP have turned the dream of affordable housing into a harsh reality for many, leaving poor families struggling to find affordable and secure homes of their own.
Despite economic strides made by government, addressing the housing shortfall remains a formidable task in Khyber Pakhtunkhwa.
Officials recognize the urgency, yet progress is hindered by factors such as inadequate infrastructure, unemployment, and limited financial resources.
Local residents while sharing their frustrations said, “every month, I see my rent increase while my pension remains the same,” says Misal Khan, a retired Govt employee in Peshawar while talking to APP.
“It feels impossible to save for a house of my own in the wake of rising inflation and high land cost.” Like Misal Khan, many face the grim reality of living in overcrowded conditions or commuting long distances to affordable areas in KP.
“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,” said Professor Dr Naveed Farooq of Abdul Wali Khan University Mardan while talking to APP.
“Globally, many Govts have attempted an alternative approach where they provide affordable housing at urban peripheries, encouraging residents to relocate where land is cheaper.
However, this approach has created its own problems as people are cut off from social and infrastructure networks as well as gainful employment opportunities,” he said.
This has led to negative consequences in low- and middle-income countries, where some cities are growing so quickly that governments cannot build services, roads and infrastructure fast enough to accommodate new arrivals, leading to a proliferation of slums at the peripheries.
The repeated change of governments, political instability and unchecked rise of prices of lands and properties in Khyber Pakthunkhwa made affordable houses in urban areas for salaried class and under privileged merely a dream and solid policies are required to clear this huge backlog.
Dr Naveed said the rapid urbanization of the agricultural land have turned the fertile land into unplanned towns and societies in Khyber Pakhtunkhwa, especially in Peshawar, Mardan, Abbottabad, Swat, Kohat, DI Khan and Nowshera districts.
He said the current demand for new housing units was growing at the rate of 600,000 houses per year and if we add 0.5 million more houses, then 1.1 million units per year would be required to clear the existing backlog of 10 million houses in the next 14 years.
The housing gap in Punjab is estimated at 2.3 million units in 2017 and was expected to skyrocket to 11.3 million units by 2047, he said, adding half of all urban households are overcrowded or lived in informal settlements with inadequate access to basic infrastructure, civic facilities and services while formal housing are almost out of reach of the poor people.
In Peshawar, housing problems would further aggravate where the urban population had reached 1.970 million and estimated to reach up to 2.80 million by 2030, that would eat up more agricultural land.
As a result of the shortage of housing units, the price of a five marla house in Peshawar crossed Rs 10 million and the rent to Rs 40,000 that was beyond the purchasing capacity of a common man and low paid employees.
Wajid Ali, former environment minister told APP that then PTI rulers has made tall claims to construct five million houses but failed to complete promises, adding poor housing policies of PTI rulers increased housing problem and property prices in Khyber Pakhtunkhwa.
In a bid to boost affordable housing, he said the federal government has introduced a new markup subsidy and risk sharing scheme for affordable housing finance that will also benefit people of Khyber Pakthunkhwa.
The scheme covers the purchase of houses, flats, and plots, as well as construction of homes on already owned land. The people can get loans for the housing unit up to 10 marla or 1500 square ft flats. The federal government has announced maximum loan size up to Rs 10 million with flat 5 percent customer/end user fixed pricing under the landmark Prime Minister’s Housing Program.
The loans will be paid up to 20 years through installments while the government are offering markup subsidy for the first 10 years. End users will pay a fixed markup of 5 percent, while the bank price will be one-year KIBOR plus 3 percent. As per procedure, no processing costs or prepayment penalties will be charged to customers.
Loans will be provided on a 90:10 Loan-to-Value (LTV) ratio, meaning borrowers will contribute 10 percent equity. The government will also provide risk coverage of 10 percent of the outstanding portfolio under the scheme on a first-loss basis.
All commercial banks, Islamic banks, microfinance banks (MFBs), and the House Building Finance Company Limited (HBFCL) have been designated as participating financial institutions (PFIs).
The Provincial Housing Authority (PHA) officials told APP that a survey regarding shortfall of houses was conducted under Naya Pakistan housing program that revealed that five million houses of five marla were immediately required in Pakistan including 7,50,000 in Khyber Pakhtunkhwa to cater people needs.
Approximately 2,62,500 kanal land is needed for the construction of these five marla housing units in KP while Peshawar requires 104, 897 houses while Mardan 58,309 houses and Swat 65,749 houses respectively.
As many as 39,981 housing units are needed in DI Khan, 39,919 in Swabi, 39,712 in Charsadda, 38,244 in Mansehra, 37, 313 in Nowshera and 35, 282 in Lower Dir, he told and added that about 32,751 were needed in Abbottabad, 28,697 in Bannu, 24,646 in Haripur, 24,421 in Kohat, 23,255 in Upper Dir, 20,048 in Buner, 21,529 in Lakki Marwat, 19,281 in Kohistan, 18620 in Shangla, 17,699 in Malakand, 17,355 in Karak, 17,748 in Hangu, 11,711 in Batagram, 10,992 in Chitral, 9,629 in Tank and 4,211 in Torghar.
Around 6,500 kanal land are available in Peshawar, 560 kanal in Swat, 377 kanal in Charsadda, 300 kanal and 8,300 land in Hangu for the construction of affordable houses.
Alike, 15 housing projects including Hangu Township on 8,400 kanal and Jalozai Phase III at Nowshera launched, adding that 10,500 housing units in Hangu would be constructed with an estimated cost of Rs10 billion in next three to five years.
As many as 900 residential flats would be constructed in three highrise buildings at Nishtarabad, Warsak-I and Warsak-II in Peshawar. A 20 storied highrise building on 36 kanal would be constructed at Nishtarabad in Peshawar City where 300 low-cost residential flats to be built for the underprivileged and poor families.
Similarly, 2,056 residential flats are constructed for industrial workers at Shahi Bala. Rehman Baba Complex Peshawar will be constructed on 79 kanal where 2,180 residential flats to be built in three years.
Jalozai housing project in Nowshera is being constructed on 8,400 kanal where about 9,000 housing units would be built besides 1, 300 residential flats for labourers and the general public.
Under PHA Foundation and KP government’s joint venture project, he said 8, 000 low-cost housing units in the first phase would be constructed at Surizai Peshawar. Danigram project Swat covering 70 kanal is constructed where quota allocated for widows, persons with disabilities and media professionals.
The feasibility study and design of new Peshawar housing project would soon be completed while its preliminary zoning plan had already been prepared. The deputy commissioners Peshawar and Nowshera completed verification of 6,571 kanal land.
High rise buildings having 140 residential flats are being constructed at Hayatabad and that flats on 331 kanal at Civil Quarters Peshawar were constructed while work on its second phase accelerated.
Besides constructing residential flats in Mardan and Pabbi Nowshera, he said a residential colony at Dheri Zardad in Charsadda is being launched where 53 housing units in first phase would be built. Mulazai housing project was completed in Peshawar where construction of houses started.
Over 80pc work on Jerma housing project Kohat having 463 plots completed besides development of 219 residential plots on 218 kanal at Havalian township Abbottabad.
As many as 1,320 low-cost flats are being constructed in Jalozai Nowshera benefiting over 40,000 poorer and labourers, adding 300,000 subsidy is being provided to each beneficiary.
The cost of each flat is Rs 2.5 million that will be provided to people on Rs 2.2 million. The Bank of Khyber (BoK) was providing soft loans to beneficiaries for its construction.
He said these projects are launched as per the government’s vision to provide affordable houses to all citizens of Khyber Pakthunkhwa.
In federal budget 2026-27, the Government has provided a number of incentives to construction and housing sectors with greater funds allocation and income tax relief.
The new tax regime looks to revise the tax rates as old withholding tax applicable on buyer was 2.5% while new withholding tax applicable is 1.25%
Whereas, old withholding tax applicable to seller was 5.5% while new withholding tax applicable to seller is 2.75% in budget 2026-27.
This measure also looks to eliminate the deemed income tax that was seen on immovable properties which was seen to be controversial in the past.
Section 7E of the Finance Bill 2026 has been eliminated which previously used to tax unused or secondary immovable properties based on 5% deemed income.
AlIke, Capital Value Tax (CVT) on foreign assets has also been removed for properties held abroad. This was tax collected on properties that had been declared in foreign tax returns which is being proposed to be abolished. The aim is to encourage declaration of foreign wealth and to increase compliance.
There is also a revision in how capital gains tax is calculated on property inherited by an individual. The cost of the property will now be equated to the fair market value of the asset when the death of the original owner took place. This reduces the tax expense collected from the inheritor based on historical valuations.
