Rapid urbanization has become a common phenomenon in developing countries across the globe. This, according to popular notions, especially among economists, is a good sign because rapid urbanization indicates economic development. According to the UN-Habitat, half of humanity now lives in cities, and the urban population will increase to 60% within the next two decades. Developing world with highest growth rate of urban population absorbs on an average about 5 million new urban residents every month and thus accounts for 95 percent of the world’s urban population growth. For developing countries, experiencing rapid urbanization, the inability of the existing social infrastructure to meet the growing needs emanating from urbanization, pose a major challenge for governments, with Pakistan as no exception.

One of the major components of the social infrastructure is housing, the lack of which begins to offset the positive effects of economic development. The housing sector is believed to affect an economy in four ways. First, real-side linkages include the effects of housing policy on macroeconomic variables such as output, employment, income, consumption, savings & investment, prices, inflation, and the balance of payments. Second, financial linkages deal with the relationship between the financial sector- providing housing finance- and the demand for, and supply of, housing. Third, fiscal linkages cover the contribution of the government to the supply of housing through tax and subsidy policy. Lastly, socio-economic linkages, implies that if the majority of the population has access to adequate housing, they are more likely to participate economically, socially, and politically in their communities.