This paper analyses trends in housing conditions in Pakistan. Various indicators of housing consumption like household size, persons per room, real rents per capita, etc., are quantified for the period from 1960 to 1980, and their apparently contradictory signals are highlighted. It is demonstrated that the approach adopted to date in Pakistan to quantify the magnitude of the housing shortage is too simplistic and could lead to wrong conclusions. As such, an alternative methodology is developed which highlights a significant improvement in housing conditions over time and a relatively slow growth in the housing shortage. A series of policy implications are then derived for the development of the housing sector.