Pakistan Real Estate Forecast 2018 Analysis & Market Trends
The first property boom in Pakistan occurred during 2003-2006, whereas second real estate boom lasted from 2012 to 2016. Both property booms resulted in inflating the real estate prices and were followed by a crash. If we see the last boom, things started changing in 2016 after the increase in property taxes. The next wave came in form of crackdown on black money. Now new tax reforms 2018 have crashed the real estate market. Here is the Pakistan Real Estate Forecast 2018 Analysis & Prices.
PART 1: Factors Impacting Pakistan Real Estate Sector
Source of Income
Everyone knows the Panama Papers Case Decision announced by the Supreme Court of Pakistan. This decision has huge impact on Pakistan real estate sector as the case was about the properties. Decision has made it clear that no citizen can keep assets beyond means. Now onward all Pakistani who buy properties have to answer about the source of income. This decision has totally blocked the influx of black money into reality sector due to which real estate prices will fall sharply.
New Tax Reforms
The new tax reforms are taxpayer friendly, as only those people will be rewarded who pay taxes. According to the new tax reforms non-filers cannot buy property worth 50 LAC or more. But real question is how many tax payers can buy properties of worth 50 LAC? The only buyers of high end properties in Pakistan were the people with black money. As new tax reforms have blocked the black money investment in real estate sector so high-end properties will see massive price crash.
NAB Probing Property Scams
Property scams and frauds are very common in Pakistan. According to the chairman of NAB, most cases are related to real estate scams. There are thousands of illegal housing schemes in Pakistan. Due to the property scams many people have lost their lifetime savings. Many societies have been restrained from sale or purchase of properties. This has resulted in low investments in real estate sector. Due to low investments we can see the price fall.
PART 2: Price Trends Pakistan Real Estate forecast 2018
Expected Price Fall
Currently property prices are 30% down since 2016. The total expected price fall is 70% from 2016 peak, so another 40% price crash is on the way. For example a property was worth 100 LAC in 2016. In few months it will fall to 30-40 LAC. Is it unrealistic? No this has happened in 2006 when 1 Kanal plot price in DHA Phase 5 Lahore crashed from 150 LAC to 45 Lac. As non filers can’t buy property worth 50 LAC or over so we will see massive real estate price fall across Pakistan.
Price Fall will not be same everywhere
Real estate worth up to 50 LAC will be less affected by new reforms as non filers can buy these properties. But properties worth more than 50 LAC will be hit harder as very few tax payers will be able to buy them. So property worth 50 LAC will be crash proof whereas property worth more than 50 LAC will be the real victim of tax reforms. Similarly the areas that have high speculation and no real demand will see big price crash. On the other hand areas with real demand and low speculation will be less affected.
The Right Time to Buy Properties
According to the new real estate reforms there are two types of buyers. Firstly people who want to buy property worth less than 5 Million can buy it immediately as market will be mostly stable due to good demand for small property of worth less than 5 million. But people who want to buy property worth more than 5 million should wait as chances of price fall are more. The buyers of high-end properties should wait till the 4th quarter of 2018.