Discourse Vol 3, Issue 3
The Assumed Shortage of Housing in Pakistan
Publication Year : 2022
Author: Durr-e-Nayab

We are short of 10 million housing units” has  been the  clarion  cry  in   politics,  media  and  the  donor• driven   research   for  the   last  10  years.   Given  an average household   size  of well  over six  persons[1], this  means  that  nearly one-third  of the  population is  without  housing.  Do we see  such  a  huge number of people  living  on footpaths, side  of roads,  under bridges or in any open area? Thankfully,  NO!

We cannot find any clarity on where this huge figure of 10  million housing shortage  came from!

Media (print, electronic and social) uses it referring to  it as  a  World  Bank estimate, while various World  Bank[2],[3]  publications quote  a report submitted to the State Bank as the source, along  with  a  study  done  by the  International Growth  Centre  (IGC)[4]  (a  DFID funded  global research effort out of the LSE and Oxford).

The IGC report cites a SBP[S] report, but interestingly, the said report  gives a  lower per annum figure than the one quoted by the IGC.

II      A more recent State Bank document[6]  gives no source and just cites the number as a given.

■    Some WB documents refer to a House Building Finance   Company   Limited’s   presentation[7] as the source  but nowhere does one find the exact method used to reach the oft-repeated number.

The worst part is that the government also uses this estimate without ever questioning its validity. And sadly we have based policy on this assumption  and initiated a large public housing effort at considerable cost.

A few indicators to judge the housing  conditions include congestion or crowding, security of tenure, provision  of civic amenities, structural quality and cultural adequacy.[8] The Pakistan Social and Living Measurement (PSLM) survey, conducted by the Pakistan  Bureau of Statistics (PBS),  provides  us with the opportunity to look into most of these factors, and we do so using its 2019-2020 round. Since urban and rural Pakistan exhibit quite different trends we look at them separately, along with some provincial patterns.

Is Congestion the source of “Housing Shortage”?

Using the definition given by the UN-Habitat[9], a house is  considered to have  a sufficient living area for the household members if not more than 3 people share the habitable room that is a minimum of 4m in area. The 4m was rightly upgraded

to 9m, as the measurement was too small.

We do not get room sizes in the PSLM, but the number of living  rooms is covered in the survey. Since 9 sq2   is a typical size even in informal settlements so we would go by the number of persons per room to estimate congestion.

Our estimates suggest that 4.37 million households,  equaling 12.3% of the total  households,  live  in congested conditions, with  over two-thirds of these  in rural  areas (3.04  million),  as shown  in Table 1.  Young children generally live/sleep in their parents’ room so we do not include children aged under 5  years, and half-count those under 12 years, while estimating occupancy per room.

So,  if congestion is the rationale behind the 10 million housing deficit, our estimates give a much lower number.

Unlike many countries, joint/extended families are still prevalent in Pakistan, with strong cultural values attached to it. The rates,  however, are not as high as one would think as 74% of the households have nuclear set-ups, with  not very divergent trends exhibited by rural and urban Pakistan (see Table 3).

Is the occupancy status leading to the notion  of “Deficit”?

Security  of tenure,  gauged by the occupancy status  in the PSLM,  show that this  cannot be the case either  as  Pakistanis predominantly live in owned houses. As Table  5 shows, only a small proportion  (11%) lives in rented houses. The sensational deficit estimate  makes no mention  of the fact that the ownership of dwellings is as much as 82% in  Pakistan  and rented space is only 11 %.  In any case,  living  in rented  houses does not represent a ‘deficit’.

Are the houses structurally stable and have access to amenities?

This is where the concern should  be. The quality of structure and access to civic amenities need to improve. Table 6 shows that access to basic civic services, like waste disposal, clean drinking  water, safe fuel for cooking and a  much-improved sewerage system are the issues that need attention to alleviate the quality of housing. Even the very high access to electricity (for light source) does not mean an uninterrupted supply.

So, what about the deficit?

There is certainly not a  “deficit of 10 million housing units”  in Pakistan. There may be “inadequate housing” in the country, but not “housing shortage’. The deficit is in the quality of life  in the  houses,  not the absence of housing units.  Even  if we take into account the high fertility rate and rising population in the country, an additional demand of 0.7 million households every year, as suggested by the IGC study (2016)(1 OJ, is very high. Going by the mean household size, it means an additional

4.5 million  people needing accommodation- an estimate that appears far from reality. The mean age of the head of the household  in Pakistan  is  44 years[11]. Given the cultural  milieu, young  adults do not generally live on their  own, thus suppressing the demand for additional  housing that could have been there because of the youth bulge.


The notion of housing shortage, and the belief that it creates employment, have led the government to push for and subsidise the construction sector. Along with fiscal  pressure, it has created an unnatural demand in the real estate market. And while the ‘shortage’  is more in the rural  areas,  all the housing initiatives are taking place in the  urban areas. A forthcoming  PIDE study on sectoral  productivity over the last decade also shows the construction  industry to be among the  least productive ones. Any protected/subsidised  industry remains unproductive, and the construction industry proves to be no exception.

Migration from rural areas is given as another reason for increased  housing demand in urban areas.  It is a movement that we at  PIDE  support,  instead  of considering it  as a  problem,  we believe that it  is through  cities  that growth  happens[12]. Better urban  planning,  supporting  large-scale,  mixed-use  housing,  can go a  long way in  providing  quality affordable accommodation to people. Doing so would deal with whatever housing shortage is there, and more importantly, tackle the quality issue.

PIDE has also shown that the housing shortage arises from the harsh zoning laws and building regulations that favour cars and single-family homes[13].  In addition,  PIDE has shown that the shortage of opportunities and high rates of sub-optimal

[1] Average household size comes to 6.56 persons using the PSLM 2019-20.

[2] Enclude, “Final Report: Diagnostic Survey of Housing Finance in Pakistan”. Submitted to the State Bank of Pakistan. November 2015.

[3] World Bank, Project appraisal document on a proposed credit, in the amount of US$145 million to the Islamic Republic of Pakistan

for a housing finance project, March 8, 2018.

[4] International Growth Centre (IGC). “Housing inequality in Pakistan: The case of affordable housing.” February 2016.

[5] State Bank of Pakistan, “Quarterly Housing Finance Review”, March 2014

[6] State Bank of Pakistan, “Infrastructure, Housing and SME Finance Department”, March 2019.

[7] House Building Finance Company Limited. “Affordable Housing for Low Income Group.” Presentation. November 11, 2016.

[8] UN Habitat, Metadata on SDGs Indicator 11.1.1, March 2018.

[9] Op cit.

[10] Op cit.

[11] Estimated from the PSLM 2019-2020.

[12] Haque and Nayab, “Cities: Engine of Growth”, PIDE, Islamabad, 2007.

[13] “The PIDE Reform Agenda for Accelerated and Sustained Growth”, PIDE, Islamabad, 2020.

[14] Haque and Nayab, “Opportunities to Excel: Now and the Future”, PIDE, Islamabad, 2020.

[15] PIDE Sludge Series- various issues estimating the cost of bureaucracy, PIDE, Islamabad, 2020, 2021