Pakistan’s construction sector reached 19.2 per cent growth in the first quarter of FY26, rebounding from a negative 3.3 per cent reading recorded in the first quarter of FY25, according to State Bank of Pakistan data. Builders credit the turnaround to a surge in domestic liquidity following the introduction of a federal housing scheme and declining capital outflows to Dubai.

Hassan Bakhshi, chairman of the Association of Builders and Developers (Abad), noted that middle-class buyers who were previously priced out have returned to the market. This renewed purchasing activity has enabled builders across urban centres to recover capital that had remained locked in unbooked apartments.

The growth comes despite strict lending constraints from commercial banks, which continue to withhold financing from applicants who lack full documentation or proper approvals from the Sindh Building Control Authority. Even with these documentation hurdles, the State Bank reported that construction expanded 14.6 per cent in the first half of FY26.

The state-backed Ghar Ho Tu Apna programme rolled out in September last year to offer loans capped at Rs10 million on extended instalment structures. Markup subsidies absorb borrowing costs above the baseline rate to pull middle-income buyers into the market.

Property firms used the influx of bank liquidity to recover capital locked in unbooked apartments. Hassan Bakhshi, chairman of the Association of Builders and Developers, confirmed that the release of purchasing funds allowed builders to restart stalled balance sheets across major urban centres.

Commercial banks continue to enforce strict paperwork requirements, rejecting applications lacking formal clearance from agencies such as the Sindh Building Control Authority.

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