Hunt to root out tax evaders begins
Pakistan is a country where shadow economy is greater than the documented economy. But now FBR has started the hunt to root out tax evaders. According to the latest plans approximately 15,000 tax evaders will be brought to tax net. Most of the tax evaders are the real estate agents, developers and investors. According to FBR many people have bought properties in plazas and housing schemes but have no tax records. By bringing more people to tax net government will increase the revenue.
New measures by the government to curb black money
Already NAB is investigating 1000’s of illegal housing schemes and property scams. It looks like that the new national slogan is, ‘NO ASSETS BEYOND MEANS’. Every investor and buyer has to show the source of income. This is a stunning policy by the government to control the influx of black money into reality sector which has abnormally increased the property prices. Due to high property prices home owners are decreasing whereas renters are increasing. The honest tax payers are suffering as they cannot buy own homes.
Property price trends now and in the future
Pakistan property prices are falling since 2016 due to the introduction of higher taxes and crackdown against black money. At present property prices are approximately 20% down from 2016 peak. Pakistan real estate is facing the affordability crisis at the moment as market is adjusting to the buying power of the honest tax payers. As people with white money have low purchasing power if compared to the people with black money, so property prices will keep falling. Property prices will bottom out when either buying power of the people will increase or the prices will come down to the buying power. 50% property price fall from peak of 2016 is expected.