Impact of Mini Budget 2018 on Pakistan Real Estate Sector
The 6th historic Budget 2018-19 of PMLN government was presented by the former Finance Minister Miftah Ismail in April. The new government of PTI has just present the MINI BUDGET 2018-19 for 9 months. First budget of new Finance Minister Asad Umar has been approved by the parliament. The mini budget has maintained many economic reforms introduced by Miftah Ismail. Lets discuss the Impact of Mini Budget 2018 on Pakistan Real Estate Sector.
Mini Budget & Real Estate Policies (03-10-2018)
#1- Overseas Pakistanis don’t need to be FILERS to buy properties in Pakistan for living purposes.
#2- NON-FILERS can inherit property from suppose or parents.
#2- Overseas Pakistanis have to be FILERS if they want to purchase property in Pakistan for business purposes.
#3- Local Pakistanis who are NON-FILERS can’t buy property worth PKR 5 Millions or more.
If any registering authority of excise and taxation department accepts, processes or registers an application of NON-FILERS for the registration of an immovable property, such person shall pay a penalty of 3% of the value of the property.
Current Property Market Situation
Pakistan real estate prices are down since budget 2016-17 when higher taxes were introduced. Later we saw the crackdown on black money that has crashed the property prices. Currently prices are 25% down from peak of 2016. Sellers are worried and want to sell their properties at any cost, whereas buyers are waiting for the prices to be bottomed out. Approximately 40% estate agents have closed their agencies due to record low income. Real estate transactions are 90% low from the level of 2016.
Impact of Budget 2018 on Pakistan Real Estate Sector
The budget 2018-19 has three important points about real estate sector. Firstly everyone has to show the source of income to buy a property. Secondly non filers can’t buy property of worth PRK 5 Million or more. Thirdly amnesty scheme has very low impact on real estate sector. The market is dead at the moment as new government has started actions against illegal constructions, land grabbers and black money. Market is full of desperate sellers but no serious buyers.
Pakistan Property Trends in Future
Many people were of the view that the mini budget 2018-19 will uplift the stagnant real estate market. But government has maintained its stance regarding the property taxes. Now we will see the real changes. Firstly it will be impossible to buy property with black money. Secondly non filers will not be able to buy property worth 5 million PKR or more. This will reduce the real estate transactions as mostly black money is invested in Pakistan real estate sector. Properties worth less than 5 million PKR will have good demand. But luxury real estate will be the biggest victim of the new laws.
What is the Best Time to Buy Property?
When real estate prices are falling, you should never buy as chances are higher that you might lose you money due to the further price decline. The ideal time to buy property in Pakistan is when prices will bottom out. New laws will take some time to impact the market, so wait for 6-8 months to buy property. Genuine home buyers will be able to buy properties at record low prices.
This blog was originally published on 27 April 2018. Recently amended on 6 October 2018 according to the latest changes / amendments introduced in MINI BUDGET 2018-19.