Karachi, Lahore and Islamabad are the most expensive cities of Pakistan to buy property
Pakistan Real Estate revolves around three main cities Karachi, Lahore and Islamabad. These three cities are famous for better employment opportunities and educational, medical & recreational facilities. Due to these facilities people from different parts of Pakistan aspire to live in Karachi, Lahore and Islamabad. Property prices are sky high in Karachi, Lahore and Islamabad due to the huge influx of population to these cities.
Middle-class is the backbone of advanced economies. Middle-class is based on the top professionals like doctors, engineers, accountants, teachers, government employees, etc. Middle-class spending power is the indication of good economy. But in Pakistan doctors and engineers are not paid well. This is why recent years have seen many protests by young doctors in Pakistan.
Average house price in Karachi, Lahore and Islamabad vs. Average Salary of middle-class people
Average house price in Karachi is 23,000,000 PKR Rupees, average house price in Lahore is 16,000,000 PKR Rupees and average house price in Islamabad is 15,000,000 PKR Rupees. On the other hand average salary of professionals in Pakistan is 1,000,000 PAK Rupees per year. Professionals require 23 years of savings in Karachi, 16 years of savings in Lahore and 15 years of savings in Islamabad to buy a home.
Even if we consider small homes of size 5 Marla, average price is 12,000,000 PAK Rupees in Karachi, 9,500,000 PAK Rupees in Lahore and 8,000,000 PAK Rupees in Islamabad. Even then a professional needs to spend 12 years of savings in Karachi, 9.5 years of saving in Lahore and 8 years of saving in Islamabad to buy a 5 Marla home. This ratio is extremely high as world affordable house price is equal to 5 times the annual salary. Therefore it is clear that houses are very expensive in Karachi, Lahore and Islamabad.
How to increase the home affordability of middle-class in Pakistan?
Home affordability of middle-class can be increased in two ways. Firstly we need to increase the purchasing power of Pakistani middle-class. This can be done by increasing the salary up to the level where houses are affordable for the middle-class. Secondly, affordability of middle-class can be increased by decreasing the house price to the level, where middle-class can afford to buy homes. House price can be decreased by building more affordable homes.