How much rent you can afford?
Not only property prices are very high in Pakistan but rents are also out of reach of many people. Pakistanis are paying major portion of their income on renting a home. This is due to lack of affordable housing and absence of housing assistance in Pakistan. Another reason is the property mafia, which is controlling the land and properties.
Ideally a person should not pay more than 30% of income on rent in an affordable market. But in Pakistan many people are paying up to 50% of their income on renting a home. This blog will outline the rent you can pay based on your monthly salary. The calculation is based on one third of your income for rent payment.
How much rent you can pay?
Rent affordability of people on minimum wage = Rs. 15,000/- per month
One third of income for rent payment = Rs. 5,000/-
Rent affordability of people on average salary = Rs. 25,000/- per month
One third of income for rent payment = Rs. 8,000/-
Rent affordability of people earning = Rs. 50,000/- per month
One third of income for rent payment = Rs. 17,000/-
Rent affordability of people earning = 1 Lac per month
One third of income for rent payment = Rs. 33,000/-
These are the figures, when you are paying just one third of your income on rent. But in reality many people are paying more than one third of their incomes on rents. We can see many people who are forced to rent in slum areas due to abnormally high rents.
Pakistan real estate market is one of the highly unaffordable markets in the world. This is due to the less investment by government of Pakistan in affordable housing sector. Another reason is the housing shortage in Pakistan. We urgently need to start affordable housing construction in Pakistan. This will result in increasing the home ownership and rents will come down to an affordable level.