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Effects of budget 2017-18 on real estate sector

Effects of budget 2017-18 on real estate sector
Effects of budget 2017-18 on construction sector

ABAD and builders are at advantage

Association of Builders and Developers of Pakistan (ABAD) and builders are at advantage as construction taxes imposed in the last budget have been withdrawn. In the last budget construction taxes were imposed according to different cities and property types. These taxes resulted in less tax collection and now government has withdrawn these taxes to boost the construction sector.

Individual home builder is at disadvantage

Taxes on cement and steel have been increased. The government has increased the Federal Excise Duty (FED) on cement from Rs 1 Rupee per kg to Rs 1.25 rupee. Taxes on steel have been increased from 9% to 10.5%. This will ultimately increase the home construction cost.

Effects of budget 2017-18 on property market

Low sale volume and low income for estate agents

Capital Gain Tax has been increased in the budget 2017-18. For non-filer CGT is 20% and for filer its 15%. Due to the increase of CGT, property speculation will decrease and this will also decrease the volume of real estate transactions. Real estate agents will see their income slashed which is bad news as more than 30% estate agencies have already closed their offices due to low transactions.

Some price fall is expected for genuine buyers

Property price is directly related to the volume of real estate transactions. Property price increases when transactions are high and falls when transactions are low. Due to low transactions, 20-30% price fall is expected. This is great news for the genuine home buyers who are unable to buy properties due to abnormally high prices.

Approval of real estate developments from SECP

Security and Exchange Commission of Pakistan (SECP)

Pakistanis are always worried about property frauds & scams. To secure the investments of Pakistanis, government has authorized Security and Exchange Commission of Pakistan (SECP) to monitor real estate sector. Now onward, no developer or builder can collect advance payment unless society is approved from SECP. This is indeed the great step to attract huge investment in real estate sector and to secure hard earned money of Pakistanis.

Pakistan property tax 2017

(6) Comments

  1. Sanam Rehman

    on   said 

    There are nes that FBR is increasing the property valuation rates.
    Please tell us about wht they are inreasinv and its impact on property market.

    • Sanam Rehman
      Yes FBR is increasing property valuation rates by 30% from previous rates introduced in budget 2016-17. The government announced in last budget that it will raise the proeprty valuation rates to actual property price in steps. So this rise is according to the plan.
      Last year when rates were increased by FBR, there were huge protest by the dealers but government did not step back. The main purpose of government by increasing property valuation is firstly to end the confusion of taxes as property is sold on high/market rates but taxes are collected on lower rates. Secondly, government will extract more taxes from property sector and this will in turn bring the more people to property net.

      Due to rise in property valuation rates, property registration fee will increases and so will be the all taxes. High taxes result in low property transaction and this decreases the income of realtors, this is why estate agents protested these new valuation rates.

  2. Muhammad azeem yddin

    on   said 


    this will just wishful thinking and nothing that prices will fall from Panama case.. arc..

    impact the result from court is not overall effect on property prices…

    it is the matter of whole machinery .. if chain breaks then property prices are being down .. whenever the supply line should not cut down the property prices never be downward..

    and this can be only happen by the GOVERNMENT MACHINERY NOT FROM COURT.

    Kindly under stand court only can order ….

    in the whole world the main machinery are being organizing authority is government .. not court..


    • Muhammad Azeem Yddin
      Government has increased the capital gain tax
      Due to rise in CGT people will hold properties for 3 years
      This will decease property transactions
      Low transactions results in low price
      Case is against black money on which Pakistan real estate sector thrives
      Without black money property price will fall
      Next few months are gonna very interesting

  3. Uzma Ali

    on   said 

    SECP authorisation is good step by government if handaled transparetly. What about property market?

    • Uzma Ali
      Authorization from SECP will definitely secure the investments and reduce the property frauds. Property market is stagnant at the moment. But increase in CGT will show its impact in long run. Due to low volume of transactions, prices will definitely decrease. People have ignored the impact of PANAMA CASE. It is about property and black money. Pakistan property market is thriving on black money. Prices will definitely fall when black money is curbed. Coming months will be very interesting.


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