Pakistan is one of the densely populated countries in the world. As per the latest census, the total population of the country is around 220 million. About 50% of this population is settled in the urban areas, especially the major metropolises like Karachi, Lahore, Multan, Hyderabad, and the Twin cities of Rawalpindi and Islamabad.
Consequently, the demand for housing projects keeps rising with each passing day. This provides an opportunity for investors in the real estate of Pakistan to harvest handsome gains from their investments made in the fast-growing real estate market.
However, like any other business, the real estate market in Pakistan also faces challenges owing to varying dynamics and volatile conditions associated with local political, economic, and societal norms.
In this write up we will discuss the pros and cons of price hikes in the real estate sector of Pakistan.
Like anywhere else in the world, real estate prices in Pakistan surge when the economy expands, whereas the real estate market faces declining trends in the economic slow-down.
During the time of healthy economic conditions in the country, there emerge sufficient job opportunities. This results in saving and enhanced the purchasing power of the households. On the other hand, if the country is passing through some uncertain conditions and economic slow-down, companies opt for downsizing through forced termination of employees.
Such trends undermine the economic well-being of ordinary people. This situation undermines people’s savings and hampers their purchasing power badly. Consequently, the real estate sector also suffers, and prices face downward trends.
The flourishing real estate market offers a lot of employment and job opportunities for people from every walk of life. Town planners, realtors, builders, engineers, and skilled, unskilled laborers are few to mention who are amongst the beneficiaries of the booming real estate sector in Pakistan.
About more than 50 small and medium scale industries are directly indirectly related to the real estate or housing sector. So, a boom in the real estate sector stimulates the economic activities in these associated industries.
A well-performing real estate sector contributes to the national exchequer in terms of taxes. These taxes are charged on the transactions done on the purchase and sale of the property.
Despite the taxes levied on the purchase and sale of real estate in Pakistan, there are various fixed taxes that are charged on an annual basis. The percentages of these taxes vary depending on the type, size, and location of the property. Property tax is charged as a percentage of the market value or reference price of the property.
Hence, the higher the price of the property will result in a higher yield of tax revenue. Thus, high rates of real estate are advantageous for the governments as it increases tax collection.
Generally, the investments made in the real estate sector provide hefty returns. In the present-day developments in small and big cities alike, prices of housing and real estate keep rising steadily.
Investors in the real estate sector of Pakistan reaping good profits. You can see many self-made billionaires in the country emerging from the housing and real estate sector. They managed to secure their slots while wisely investing in the emerging industry.
Unlike other manufacturing and process industries, the real estate sector is the one that seldom faces any contraction. The sense of security and prosperous outlook of the housing sector of Pakistan encourages people to invest in real estate to get rich in a lesser period.
So, the landlords and ordinary households tend to invest in property for sale in Pakistan for making excellent profits on the money invested.
Continuous increases in the prices of real estate may not be helpful all the time for the housing sector and other allied industries. We will discuss a few drawbacks of the rising prices of the real estate sector in Pakistan.
If the prices of the housing sector keep rising, it may cause slowing down the economic activity at large. Highly increased prices of real estate make the property out of reach for the vast majority of the country.
So, people may not have the incentive to apply for the loan or mortgages with the fear that they might not be able to acquire their desired property within their budgeted amount. So, they might be giving up the idea to own or built a home.
This situation may discourage the demand for bank loans. Thereby, spend reduces, and the industries associated with the housing and building Construction sectors start declining.
If the situation is not controlled adequately and timely by introducing some policy measures, this may cause an overall recession in the economy. Hence rising prices of property for sale in Pakistan may be a disadvantage.
If not checked through some policy measures, the unrealistic price hike for Pakistan property may discourage the people’s desire to acquire or build their own homes.
This happens when the property for sale goes out of reach of ordinary buyers. Finding themselves unable to purchase a home or small piece of property, they give up the idea to save money for investing in real estate.
Consequently, the investments might be declining in the housing and real estate sectors. Thus, demand for real estate in Pakistan may experience a downward trend. So, this recessionary trend in the Pakistan property market may not be desirable at all.
Here comes the role of government through its regulatory bodies to lend a supportive hand to the real estate sector to safeguard the business interest of the stakeholders, which includes ordinary investors, realtors, builders, and lending institutions such as banks and house building corporations.
Due to COVID-19 Pandemic, like other sectors of the economy, the conditions in the real estate market are a bit more volatile these days.
So, you must hire the expertise of some professional and credible real estate agents. Professionals at ZEM Builders are well known for their in-depth understanding of the dynamics of the real estate market in Pakistan.
Their professional guidance may prove to be helpful for you to invest safely in the real estate of Pakistan. Simply call to make an appointment and the rest will be taken care of by ZEM Builders being your support to negotiate the best deals for any type of real estate in Pakistan.
+92 51 885 9999