By Iqra Waheed ISLAMABAD, March 04 (INP-WealthPK): Pakistan’s housing and construction sector witnessed a record growth of 85% in the year 2021 thanks to a boom in the government’s flagship Mera Pakistan Mera Ghar housing scheme, which saw a whopping Rs 38 billion disbursements in the month of December. According to a State Bank of Pakistan (SBP) report, overall credit under the housing scheme has improved to Rs355 billion, reported WealthPK. The launch of the low-cost housing scheme has also increased the construction sector’s contribution to the GDP. The construction sector contributed 2.5% to the GDP in 2021, employing an overall 7.71% of the labor force, according to the SBP report, which was seen by WealthPK. The turnover from the low-cost housing project was around Rs5,858 billion; total jobs created were 924,858; the total units approved were 56,362, valued at Rs1,172 billion, according to WealthPK. [caption id="attachment_64503" align="aligncenter" width="450"] Source: Naya Pakistan Housing and Development Authority (NAPHDA)[/caption] The credit for overall housing and construction sector in Pakistan is on the rise as it increased from Rs314 billion in November 2021 to Rs366 billion in December 2021. The SBP report showed an overall increase in the amount requested under this scheme and the amount disbursed. The amount requested under the scheme was about Rs244 billion in November 2021, and Rs276 billion in December 2021. The amount approved was about Rs99 billion in November 2021 and Rs117 billion in December 2021. While the amount disbursed in November 2021 was Rs28 billion, and Rs38 billion in December 2021. [caption id="attachment_64506" align="aligncenter" width="696"] Source: State Bank of Pakistan[/caption] The construction industry contributes to the long-term growth of the economy. Almost 70% of the unskilled labour force is associated with the housing and construction industry. A boom in the construction sector also leads to an uptick in the growth of 40 other linked industries, stimulating economic activity, creating jobs and ensuring availability of affordable housing to teeming millions. The best part of the prime minister’s low-cost housing project is that the housing units are mortgaged to the institution providing loan as a guarantee. This facilitates the borrowers and also guarantees the financial institutions’ loan security. Another good feature of the scheme is that the monthly bank instalment is about the amount of monthly house rent. Under the loaning facility, up to Rs10 million can be credited. The loaning programme is divided into four tiers with the low-cost financing limits having low mark-up rates. Mark up rate for Tier 0 is 5% for the initial five years, and for next five years it increases to 7%. For Tier 1, a 2% rate is charged for first five years, and 4% for the rest of five years. For Tier 2, the mark-up for the starting five years is 5%, which goes up to 7% for the rest of five years. For the last Tier 3, mark-up for the first five years is 7%, and 9% for the rest of five years. The most attractive among the four tiers is the tier-3 as applicants can apply for amounts ranging from Rs6 million to Rs10 million under this head.