The housing market in Phuentsholing is characterized by high demand and limited supply. Bounded by the international border to the south and steep mountains to the north, there is little room for urban expansion. This has led to the proliferation of mid-rise apartment buildings and a high cost of rent.
Due to the housing shortage and high rental costs within the Bhutanese side of the border, it is common for hundreds of Bhutanese citizens and expatriate workers to live across the border in Jaigaon, India, and commute into Phuentsholing daily for work or school. The government has initiated several affordable housing projects, such as those by the National Housing Development Corporation (NHDCL), to alleviate this cross-border dependency.