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Pakistan property prices are about to crash

Pakistan property prices are about to crash
History of property boom and bust in Pakistan

From 1947-2002, Pakistan real estate sector was never considered as an investment hotspot. The first real estate boom in history of Pakistan was observed from 2003 to 2005. In 2005 prices were so high that common Pakistanis were unable to even think of buying small properties. The real estate bubble soon busted and prices started crashing until 2009. From 2010 to 2012, we saw slow but gradual property price appreciation. Pakistan observed its second property boom from 2013 to 2016.

There were four major reasons of property booms in Pakistan. Firstly, during every boom in Pakistan, interest rates were record low. Due to low interest rates, people withdrew their money from banks and invested in real estate sector. Secondly, there were no major taxes on real estate sector due to which day trading, speculation and flow of black money increased in real estate sector. Thirdly, great infrastructure boom in major cities of Pakistan was also a major reason of high property prices. Fourthly, Pakistani expatriates sent record remittances and major portion of these remittances ended in the real estate sector.

Current situation of Pakistan property market

Before the month of Ramadan property market was observing gradual price appreciation. Property market slowed in the month of Ramadan, which is a normal routine. Property transactions have halted since July 1, 2016 as government has imposed new property taxes and new property tax evaluation system.

Coming property crash in Pakistan

Pakistan real estate sector is heading for crash. Here are the major reasons of this price crash:

House affordability is very low due to sky high prices

Due to sky high property prices in Pakistan, house affordability is very low. Even doctors, engineers, accountants and other top professionals in Pakistan cannot buy homes. Affordable house price to income ratio is normally 1:5, but in Pakistan it’s more than 1:10. When there are no buyers for properties, a crash is due to happen shortly.

New property tax evaluation system in Pakistan

The government has imposed new taxes and property tax evaluation mechanism in Pakistan. According to this new evaluation system, property tax will be calculated on higher rates rather than DC rates. These new developments have negative effects on day trading in real estate sector. Day trading in real estate sector is one of the major reasons of sky high property prices in Pakistan. Due to the absence of day trading property prices will crash in Pakistan.

Investor are withdrawing their investments

Due to imposition of high capital gain tax, investors are withdrawing their investments to invest in more profitable investments like stocks & shares. This is why Pakistan Stock Exchange is hitting new highs every other day. PSX is named as one of the top 10 best performing stock exchanges in the world. Investors are one of the major reasons of high property transactions. In the absence of investors, real estate prices will crash.

Foreign Pakistanis are losing purchasing power

The main reason of sky high property prices in Pakistan are the foreign Pakistanis with high purchasing power. In last year, Pakistani expatriates sent record $20 billion remittances. Large portion of these remittances were parked in the real estate sector and we can see sky high property prices in Pakistan.

Foreign Pakistanis are fast loosing purchasing power due to uncertain economic circumstances in western countries. Pakistanis who are living in UK & Europe have lost lot of fortune due to declining currencies after Brexit. Same is true for USA, Australia, Canada and Middle Eastern Countries are at fire due to low oil prices.

Therefore, it is expected that Pakistani expatriates will send fewer remittances next year. Due to this we will ultimately see reduced real estate transactions in Pakistan and property prices will crash.

Negative sentiments about real estate market

Real estate sector works according to many fundamental but what matters most is the sentiments of general public. When there are positive sentiments people start investing in real estate sector and when there is negative sentiments people withdraw their investments. At the moment there are negative sentiments about real estate sector and people are canceling even sure deals. Due to this negative perception a property crash is imminent.

Property price crash is good for real home hunters

Real home buyers in Pakistan are upset due to inflated house prices. First time in history of Pakistan renters are increasing due to abnormally high house prices. Due to high property prices, home ownership is also decreasing in Pakistan. The house price crash in Pakistan will provide the most desired relief for the middle-class people, especially for the first time home buyers as they will be able to buy homes.

Pakistan property tax amendments 2016 explained
How property taxes will be calculated – Complete Guide


  1. Aamir

    on   said 

    Property prices have been fairly frozen since the tax reforms in last couple of years, but it is the PTI leadership that has really started to crash property values due to deteriorating economic situation. Also, economic situation in UAE and KSA is too lean, and this is where most of the foreign exchange reserves came from in the form of expat remittances. People will find themselves selling properties only to sustain themselves.

  2. Farooq

    on   said 

    I agree that don’t property prices in Pakistan have risen since 2016, and even slightly fallen in some new developments, but if anyone is expecting property prices to halve, it will never happen because of high birth rate of (22 per 1,000 population) so land and property demand will always be proportional.

  3. Imran

    on   said 

    Dear Author,
    Still no property price fall as per your earlier predictions although we as in the middle of December. Yesterday I visited two property dealers dealing in Scheme 33 and disappointed to see them all happy as the prices are still going higher. It might be that the increase rate gets a bit slower, but the prices will remain higher for people like me.

    • Imran
      Property prices are falling, dealers are just playing the tactics. Don’t be trapped. On 8th of December Pak Rupee fell by 2.6% against dollar in a single day. When economy is down and black money is out, how prices will increase?
      NAB/FBR is investigating the property scams and illegal housing schemes so property prices will only fall.
      FBR is collecting the details of all people who invested in real estate sector from 2014-17. Purpose is to check the source of income. So who will buy property when they know FBR will hold them.
      PROPERTY PRICE FALL IS WRITTEN ON WALL. It might take some extra time.

      • Humayun Isam

        on   said 

        Asalamoalekum I agree with your prediction as the main reason for the rise in the property market was corruption and foreign investments and if the government continue with the policy of accountability then no one with black money will be able to buy and also it is going to benefit local people . And its time for people to invest in agriculture and small industries .

  4. Tariq

    on   said 

    Property values are only going up in Pakistan. I don’t know where sudden influx of money has been coming since 2005, but values are only going up.

  5. What is the current property market situation in general in Pakistan, and what to anticipate in the next 6 to 12 months? Also, which is better to invest into, plots or houses?

    • Ali
      Pakistan property market is crashing slowly
      it not the time to buy property
      Property prices will bottom out in next 3-5 months
      So end of 2017 or start of 2018 will be the best time to buy property
      For investment point of view
      Plots are always better option than houses are plots prices are less than houses due to which plots have more buyers

  6. Nice post and I want to appreciate you for sharing, I have been listening many issues related to property taxes, well can you please suggest me any real estate or any property dealer who can easily help me out ? Do let me know soon, i want to buy property in bahria town karachi

  7. There isn’t any legal provision to make payment outside the country for the sale of land/assets in Pakistan. And that is the reason one would ask for outside settlement at the first place, the seller should be indifferent otherwise.

  8. Eyaz

    on   said 

    Can someone please tell me how much I can expect to pay in transfer taxes and titling, and annual property taxes on a house worth, say, 50 lakh in Islamabad?

    Property values would have come down for at least the buyers with dollars, euros, GCC currencies, etc. but present government has almost pegged rupee to dollar which it is maininting in the face of decling exports and remittances by borrowing from China, which is the exact opposite of what many EU nations want to do. Countries such as Italy want to get out of euro only so they can print, spend and consequently devalue their currency.

  9. Nadeem

    on   said 

    Now, it’s December. Any foresight as to which way the property market is heading? From what I see, I would say it’s either holding or even going up. What are you thoughts. Thanks.

  10. Jamshed

    on   said 

    Hi Ghar47 team , first of all it’s great website with some serious discussions and information, so keep up the good work !! Secondly like many people , I have question as well . Which is that I have 1 kanal plot in bahria phase 8 , and which is more beneficial to sell it as it is or to develop it and then sell it ( investment point of view) … kind regards

    • Jamshed
      Many thanks for your appreciation
      You know what is the problem with sale of properties?
      When prices are high you will get few buyers
      SO IT IS BETTER TO KEEP PLOT as it will get more buyers
      If you construct house you will not get many benefits as compared to plots as many people want to build houses according to their wishes

  11. Aoa
    Still we can’t see any major downfall in property prices till to date. Example is of Bahria 8 Rwp where a meagre downfall has been observed. Previously number of transfers was reduced but now it’s also bit taking place. Any body to comment that what is likely to happen with property prices……

    • Salam,

      I think the prices will come down eventually, i would encourage people not to buy property if they have money, that will help all our nation from middle income group to afford the property and to kick out our investor brother who made our life hard and push all nation to give their hard saving money to them. They are doing business but on the same time they are making our life harder. Even oversease pakistani’s cannot afford a house here. I wish the property will crash for good reasons and comes to the price where we can afford the house according to pakistani earning power.

      Many Thanks

      • Muhammad Anwar

        on   said 

        Hi asif,
        can you tel, how much it will take that prices will be fall.
        As i have searched that prices are only low down in bahria phase 8, property rates in all other matured societies are freeze, however, no doubt, sale purchase has been slow down, however, plots rates in DHA2 ISB or naval are still high,
        can any body comment

  12. Attaullah

    on   said 

    Pakistan has been in the throes of a massive property boom. Since 2002 house prices have risen by the amount they are wroth every year. 90% of the court cases in Pakistan are to do with land, and mostly between brothers and sisters fighting over inheritance. Now, they are falling faster than a missile shaped stone! The problem is that this will not stop, these house price collapses will accelerate faster and faster and will go down for a very long time. This was unsustainable right from the start, from the first foreign-based Pakistani who smelled the boom and invested in it. Good riddance to the Pakistan property boom – nobody ever wanted it in the first place.

    • Attaullah
      Great insight
      What is fair market?
      Where average salary can buy average property
      What is average salary in Pakistan? = Rs. 50,000/- or less
      50000x12x5= 30 Lac
      So average property price should be 30 for middle-class people and 60 lac for upper middle-class people.
      But in Lahore, Islamabad and Karachi average house prices is near to 1.5 Crore.
      This abnormally high property prices was due to two reasons.

      BLACK MONEY has been stopped by FBR
      Pakistani expatriates are fast loosing purchasing power due to economic melt-down in Middle Eastern Countries.

      Now property prices will take nose dive.
      A bloodbath for Pakistan real estate property.
      50% price crash or even more.
      Sad for the people who will loose life savings.
      Many people will be able to afford houses due to low prices

  13. Winds of war may also keep buyers away, although personally I have not observed any significant drop in property prices so far. Sellers may just be putting up their properties for rental instead of taking a loss in selling them.

    Sorry to ask somewhat irrelevant question. Abroad, larger bank branches offer safe deposit boxes for rental, where people store away their valuables, such as jewelry, bonds, etc. Do such box rentals exist in Pakistan?

    • Aziz
      There are many reasons of property crash in Pakistan but biggest is the FBR
      FBR is asking the source of income and this has stopped the easy flow of black money in real estate sector
      Yes many banks provide boxes on rents for jewelery and other stuff

  14. A.K. Rana

    on   said 

    All buyers should hold off until sometime next year. Too many external (other than tax) factors converging, such as Chinese worries over it’s 46 billion investment in a politically unstable country, falling exports, falling remittances, and water shortage on top of energy shortage.

    • A.K. Rana
      Beautiful analysis
      Property prices are not falling due to high taxes as taxes are very high in UK, USA, Europe, but prices are still rising
      Property prices are falling due to many reasons you have mentioned

  15. Zaid Sultan

    on   said 

    There’s something unsettling about property price rise in Pakistan between 2003 and 2014. Property values simply cannot double annually. They have not anywhere else in the world. In the US, I purchased my home from bank out of foreclosure for almost $139,000 in May 2008, spent another $15,000 on repairs and sold it for almost $102,000 in March 2012, with a loss of $52,000 or 33.8%.

    • Zaid Sultan
      Many thanks for beautiful analysis and first hand local street / market reporting of actual facts.
      Unfortunately many Pakistanis are not willing to accept the reality
      I studied in London, Masters was about Housing
      Even after extensive study and observation of local housing market never saw gains like Pakistan.
      Pakistani market is in free fall
      Only reason that property prices were so high in Pakistan | Inflow of black money in property sector
      As FBR is asking the source of income now
      No more transactions and no buyers in the market
      Situation of middle east is equally alarming due to low oil prices
      Pakistani expatriates are loosing jobs and revenue which also has great impact on Pakistan real estate market

  16. MA Satar

    on   said 

    Let me add another reason to it. As soon as the US implements e-visa for Pakistan as John Kerry recently suggested, investment will flee Pakistan. Property values are so high in Pakistan that for the same prices, you can afford a 4 bedroom house on 0.38 acre privacy-fenced lot in much of the US, and along with it, trade a congested, dirty and polluted environment for a cleaner environment. Also, Dubai is building cheaper properties in the desert to attract home buyers. Pakistanis and along with them their investment became artificially confined to Pakistan after 9/11. Once travel abroad is encouraged, with it will flee investment. Anything too high is naturally unstable, and will regain stability after correction.

  17. Waqas Warsi

    on   said 

    it is very unfortunate that real home hunters r sitting aside due to high prices of homes/plots, i m one of them. Prices going up within days. I have budget of 2 Million rupees and looking for a plot, u r requested to please advise should i buy now or wait few months to get better prices ? (Lahore)

  18. Nadeem

    on   said 

    Hello Everyone ,

    Any suggestions where to invest 15 million in current market situation ? which area in Lahore you think is best where i can buy plot at the time?
    further more do you think its better to buy one plot in DHA or split it to buy in cheaper areas?

    • Nadeem
      Please explore under-construction part of Lahore Ring Road from Kamahan to Raiwind Road. Cheap societies near southern part of Lahore ring road are best options for property investment in Lahore. DHA will see massive price decline.

      • Nadeem

        on   said 

        Thanks for your feedback, i think the property dealers are trying their level best to hold the prices on the higher side hoping that somehow this will hold the market and create the impression that demand is really high, if Yasir Habib`s article is true reflection of the market then i think we are not far from breaking point and we might see this market crumbling very soon, to be very honest i am holding myself from any investments merely on your advice , because if your assessment is right i might save some hard earned money and if its wrong then i have nothing to lose.
        Thanks for your kind advice

        • Nadeem
          Just 10 minutes before replying your comment
          I was walking with a estate agent of DHA Lahore.
          He was saying the same thing
          Market has recovered
          Prices are now back to the level where they were

          This is called as the wishful thinking

          Once again I repeat

          August is the month of Protests / Dharna
          September the month of Eid
          October the month of Muharram
          November is the month of reality
          When dealers will realize that they have lost every thing
          How prices can go up when there is no buyer in the market but only sellers?

  19. If you sale a property 10 times then you have paid more tax then the property value it self, who will bare this cost.
    Property value 10 Rs. Sold 10 Times tax payed 10 rs. property value is still 10 rs.
    Total expense is 20 Rs.

  20. saba

    on   said 

    what that column tell not fair as i m searching 03 mrla home in samanabad since last 6 months but prices are still as before 02 month no change

  21. saba

    on   said 

    who says property prices go down.. these are stagnnent… no impact of new taxes… only on this web site i read about prices go down while actully in market no such scen found. prices are as regular as before 30-06-0016

  22. Kamal khan

    on   said 

    Sir, What you suggest if I invest four year instalment paln for a luxury apartment on canal bank road near to Bahria town………. after four year where I m standing. .. (1.2 crore) actual price

    • Kamal Khan
      I know what project you are asking about
      In 2020 we will see Lahore Ring Road completion in this area. This will be good investment. And your property will be worth at-least 2 crore

      During property price crash two things are important to keep in mind
      Houses and apartments loose less value than plots
      During property crash developments on installments are good as you pay less and at the end of installment period property worth is more

  23. zahid

    on   said 

    i have one plot in bahria lahore before new tax was imposed it was 60 lac n recently i planned to purchase one more land in dha but due to rumours i got what is your sugestionz.either i have purchase new one and old one keep it with me …..or….sale out old one n wait until market get stable?

  24. khaan jeee

    on   said 

    what about the plot of 200 sqr yards purchased for 48 lacs and in same year i wana sale it on 50
    2 lacs margin
    and valuation according they charging 16000 per sqr yard
    now gain is 50 lacs – 32 lacs = 18 lacs
    this 18 lacs is taxible
    18*10/100= 1.8 lacs
    which i have to pay as capital gain lols
    mean saaalo profit 2 lac ka huwa 1.8 lac fbr lay lay gi mujay bacha 20 hazaar
    abhi sabar kero
    what about property tax thats 1 %
    now have to deduct one percent too
    bacha tootaaa

    • Khaan Jee
      You have explained every thing in detail
      This is what no body is understanding and claiming that prices will go up
      According to your calculation what is the margin of investors?
      Zero and even minus is many cases
      This is why property prices are crashing

  25. saba

    on   said 

    dc rate has been announced..increased almost 150,000 lac per marla..that mean if before registry of 03 marla home worth 900,000, now increased to 1,350,000.. what will tax amount for buyer..
    total 1,3500,000*5%=67,500/-
    no with holding tax as property less than 04 (M)… am i right or any addtion

  26. If we bought flat in khi 2015 Oct
    Flat price 1 coror 45 lac
    Can v hold or sell out this flat
    And 1 flat we rented n in 1 flat we living

    Pls tell me

  27. kashif

    on   said 

    Sir, I would like to know crash in terms of % you foresee? In last crash it was app. 35%. In how many months we will see bottom price of property? any idea

    • Kashif
      According to you figures crash was 35% last time
      This time we will see bigger crash
      1- New taxes are rewarding long term investments
      2- No more speculation or SATTA in property market
      3- Black money is totally blocked from real estate sector
      4- Property profits are less due to new valuation of properties (It will be closer to original property value in few years)

      CRASH IN %

      50% price crash in 6-9 months
      Prices will bottom next year
      Property prices will be stagnant for few months
      Prices will start increasing in 2018 but price rise will be slow and gradual

      • kashif

        on   said 

        There is another angle. Those who hold properties will pay CGT once at full rate and will have white money and shall be able to buy Plots. There will be no or very little CGT if plot is already declared at new value and is in market for 2nd or 3rd time sale. Only problem is 7% / 11% tax on every time change of title.
        Its possible Market can settle and can get back to normal as of june. Lets see what happens.

        • Kashif
          I wish so but this is the wishful thinking
          FBR will ask source of income. Due to this investors with black money are frightened and are in panic and are withdrawing their investments. High property prices in June were due to unchecked black money in real estate sector.
          Pakistani people love to give charity but hate to pay traffic challan. People in Pakistan hate to pay taxes. This is the harsh reality. No sentiment in negative due to recent taxes. People are hesitant to invest in real estate sector for the time being.
          Wait till first week of October as we will see much clearer picture then

  28. Ali Asghar

    on   said 

    Really a first good step taken by the government to regulate the property. I am working in middle east since last 8 years but was finding it tough to buy a reasonable property due to extremely inflated prices. Correction in real estate will help genuine buyers to buy property.

  29. Syed Ali

    on   said 

    This is rational. this is happening as prices are down in DHA city Karachi. now SATTA will not work the way it used to in property business. Another important factor of black money. In new law valuation table will be considered for section 111 income tax ordinance. FBR will put plenty on many with no trace.

    • Syed Ali
      Pakistani nation is on the top of the list to give donations but at the bottom to pay taxes. The new property tax system is rewarding for the tax payers. This is a good start. Hope black money will be flushed out of the real estate sector and we will see much mature market.

      SATTA in real estate sector
      Yes to some extent, real estate sector was behaving like Stocks, Shares and Gold. New rates every hour, everyday.
      New amendments gave a silent message

  30. M Jamil

    on   said 

    To the Author,
    You have a very naive understanding of what underpins the Western property market. Interest rates is only one piece of the jigsaw. The property market in the UK is cyclical, post 2008 financial crisis there was a correction in the market but not the major off the cliff correction.

    The property market in the UK is anything but affordable currently even with the low rates.

    I agree with Dr. Anjum, Pakistani real estate is in its infancy and in my view will over time mature. However, that time is a bit of a long way away.

    • M Jamil

      Since 2008 western financial system is living on pills and steroids
      All central banks are on drugs and out of bullets

      The financial crisis of 2008-9 was controlled by lowering the interest rates in western countries.

      Interest rates in Canada, UK, EU, USA, Australia are record low.

      So this time no chance to decrease interest rates which is already near zero.

      Hope things go smoothly. Otherwise Banks are gonna loot hard earned money of home buyers through foreclosures.

      Look at banking crisis in Italy and Portugal

      I will recommended you to regularly visit

      I have no interest in the decline of western civilizations. But it is great for our team to present balance analysis. Picture is getting ugly for west unfortunately.

  31. Dr.Anjum

    on   said 

    Most of these assumptions are overestimated. Only pound price is crashing not Euro or USD. Looming world Economic collapse would certainly reshape the world. If real estate investor would take out money, less houses would be built and price paradoxically would increase. Even in western countries where I am living, high capital gain tax 30%, very high stamp duty, local property tax annualy, home insurance ,property price is so high , mortgages are pledged for 35 years with APR 4.5% with 20% down payment. Home Maintenance expenses are 4-6K euro per annum with mortgage 15K per annum. Pakistan real estate still in baby sitter mode. Best time to buy is when you can afford it. Good luck fellow countrymen.

    • Dr. Anjum
      Many thanks for your great insight.

      European and western mortgages housing look affordable due to historic low interest rates.
      Interest rate in UK is 0.5 now but historic average is 5.
      Picture will be very ugly once rates start increasing.
      Then just one news foreclosures.



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