Pakistan’s property market could be worth around Rs7.1 trillion annually, equivalent to nearly 6.7 percent of the country’s GDP, but a substantial portion of its actual value remains outside official records, according to an analysis based on publicly available data.
The analysis found that property transactions in Pakistan often involve two different values: the amount declared in official documents and the actual price paid by the buyer. While government records capture the declared value, there is no national database documenting the full market value of residential, commercial and agricultural property transactions or how the payments are settled.
Administrative data for fiscal year 2023-24 recorded approximately 1.695 million property transfers. By combining federal withholding-tax collections, provincial stamp-duty and mutation data, official valuation tables and estimated differences between official and market prices, the annual turnover of the property market was estimated at about Rs7.1 trillion.
Federal collections under Sections 236C and 236K, after accounting for assumptions regarding filers and non-filers, indicate a taxable property base of around Rs3 trillion. Provincial recorded and deputy commissioner (DC) values provide another benchmark of approximately Rs2.54 trillion.
However, neither figure represents the actual market value of properties. Official valuation rates frequently remain below prevailing market prices, with the difference varying considerably by location. Under-declaration of property values can also reduce tax liabilities, while valuation tables often fail to keep pace with changing market conditions.
After adjusting the recorded values to account for the estimated gap between official and market prices, the analysis places annual property turnover at around Rs7.1 trillion.
A key issue is the extent to which property transactions are settled outside the banking system.
Since there is no comprehensive dataset showing how the full value of property transactions is paid, the analysis used a modelled scenario in which 75 percent of the recorded property value is settled through banks, while only 20 percent of the amount above the declared value moves through the banking system.
Under these assumptions, around Rs2.81 trillion of property payments would be settled through banks, while approximately Rs4.28 trillion, or around 60 percent of the estimated annual turnover, could move through cash or cash-like channels.
An estimated 85 percent of these cash or cash-like payments could arise from the difference between declared and actual property values.
The Rs4.28 trillion figure represents an estimate of annual cash or cash-like transactions rather than money permanently kept outside the banking system. Sellers may subsequently deposit, spend or reinvest these funds.
The broader concern is that official transaction records may fail to capture a significant portion of the property market, including the actual prices paid and the channels through which payments are made.
Pakistan’s mortgage market remains extremely small compared with the size of its property economy. Total mortgage financing is estimated at less than 0.5 percent of GDP, with a significant portion reportedly concentrated among bank employees.
As formal housing finance remains limited, families often rely on personal savings, borrowing from relatives, rotating savings groups, jewellery sales, inheritances or financial assistance from relatives working overseas.
Many buyers also make instalment payments directly to property developers over several years. This arrangement can expose households to significant risks if projects are delayed, abandoned or developers fail to deliver.
In Karachi alone, more than 200,000 families over the past three decades have reportedly seen their savings affected by stalled projects or developers disappearing with funds.
The system places substantial construction and financial risk on buyers. Households may begin paying for properties before construction is completed, effectively providing developers with working capital while having limited protection against delays or project failure.
Pakistan received a record $41.6 billion in workers’ remittances during FY2025-26, providing households with a major source of foreign exchange and savings.
An assessment of household economic data indicates that remittance-receiving households contribute disproportionately to construction and home-improvement expenditure. Although fewer than one in 10 households report receiving remittances, these households account for around 29 percent of measured construction and home-improvement spending.
A conservative estimate places identifiable remittance-linked property and construction flows at approximately Rs400 billion to Rs600 billion annually.
However, families receiving remittances have limited formal financial products that can convert years of overseas earnings into diversified savings, mortgage-backed investments or financing for newly constructed homes.
As a result, purchasing a plot often becomes the preferred savings strategy.
Pakistan’s 2023 census shows that 81.9 percent of households live in homes they own, while the ownership rate in urban areas stands at around 71 percent.
However, homeownership figures do not necessarily reflect the ability of households to purchase a home in today’s market. Inherited properties, ancestral homes shared by multiple families and recently financed houses are all counted as owner-occupied housing.
An affordability assessment based on household income and prevailing property prices estimates that a modest house costs around 19 times annual household income in the priced sample.
A 20 percent down payment could require approximately 46 months of total household income. For a household saving 15 percent of its annual income, accumulating the down payment could take around 25 years, assuming property prices remain unchanged and savings generate no return.
A 20-year mortgage at a 12 percent interest rate with an 80 percent loan-to-value ratio could require monthly payments equivalent to roughly 201 percent of household income, making homeownership unaffordable for many salaried households.
This creates a sharp divide between existing property owners and prospective buyers. Existing homeowners may hold residential assets worth around 2.3 times their income, while new buyers face property prices equivalent to around 19 times annual household income.
Consequently, inherited wealth, family support, ancestral land and overseas relatives increasingly determine who can enter the property market.
Pakistan’s 2023 census recorded around 241.5 million people living in 38.3 million households, with the population growing at approximately two percent annually.
Maintaining the existing average household size would require roughly 840,000 additional dwellings each year. Against an estimated planning figure of about 150,000 formal housing units annually, the gap remains substantial.
At the same time, around 12.45 million existing homes are classified as semi-pakka or kachcha, highlighting a significant housing-quality problem.
The country’s housing challenge therefore consists of several interconnected issues, including the need for new housing, overcrowding and the upgrading of existing homes.
Limited availability of serviced urban land and inadequate municipal services further complicate the problem.
Singapore provides an example of how savings, housing finance and housing supply can be integrated into a coordinated system.
Through its Central Provident Fund, workers can use accumulated savings for housing down payments and loan repayments, while regulations protect retirement savings and impose conditions on the use of those funds for property.
The experience suggests that housing policy, household savings and financial intermediation can be designed as parts of a single system rather than being addressed independently.
In Pakistan, these areas remain fragmented across different institutions and policy frameworks, leaving households to manage decisions involving savings, housing, remittances, mortgages, property documentation and developer risk largely on their own.
A shift towards more transparent property transactions could begin with bringing official valuation tables closer to prevailing market prices and requiring full-value banking transactions above a specified threshold.
Reducing reliance on cash would help ensure that the economic value of property transactions is properly recorded and incorporated into the formal economy.
Greater protection for property buyers is also needed. Escrow arrangements and unit-level identification of buyer payments could ensure that instalments collected for a particular housing unit are used for that project rather than being diverted to other developments.
Financial institutions could also assess mortgage eligibility during the construction phase, allowing completed properties to move directly into mortgage or rental-finance arrangements.
A formal link between overseas remittances and housing finance could provide expatriate families with savings and investment products connected to newly constructed homes rather than simply encouraging investment in undeveloped plots.
Reliable land titles and transaction records are also essential. Informal trading of property files should be brought under an appropriate regulatory framework to reduce fraud and protect buyers.
Pakistan’s property market is not simply absorbing excessive investment. Property has increasingly become an inflation hedge, retirement asset, inheritance strategy, store of wealth and, in some cases, a means of holding undocumented funds.
For many households, buying a plot remains one of the few accessible ways to preserve savings and protect wealth against inflation and currency depreciation.
The challenge is therefore to provide credible alternatives that allow households to transform regular savings into homes, income-generating assets or productive investments.
Redirecting savings through formal financial institutions could also provide capital for industrial investment, job creation and export-oriented activity.
A stronger system of financial intermediation could help shift capital away from property as a passive store of wealth and towards productive economic activity.
Ultimately, Pakistan’s challenge is not simply how much money is invested in property, but how effectively household savings can be converted into new assets and productive economic activity.
A country does not become capital-rich merely by accumulating land. It becomes capital-rich when savings can continuously finance new investments, generate output and create income.
For Pakistan, the key challenge is therefore to move from saving in plots to building an economy.
