I will be hurt by property crash pakistan, but what i dont understand is that how can a normal person afford a kanal house of 3 crore in pakistan as we don't have enough buying power?
How many salaried persons can afford to purchase a house ?
How is the market moving with such high prices i fail to understand?
There is buying power whether it comes from the elite, overseas Pakistanis or those within Pakistan who somehow by hook or crook managed to save some money. Default can mainly occur through foreclosures if home owners default on their payments but that is on a mortgage and in Pakistan almost all the deals are cash based. You cannot be 100% sure whether people can afford to buy or not so a crash may come if the land mafia is destroyed and real estate is left at the hands of the common masses. If they can afford its fine and if not than as you expect a crash maybe inevitable. But yet i disagree because there are overseas investors who can afford and so does some people within Pakistan.
Agree with Arshad sab.Yes it's true property crash in Pakistan because of housing societies became too greedy and insincere.
Big brands and fail projects are front of us.I think this is main reason of property crash.
Regards
Property crashed in 2008 with all the factors mentioned by Arshad saab.
So his arguement is not valid IMO.
I think there cannot be a crash but there might be limited sudden decline if Malik Riaz is engulfed in some huge scandal involving Bahria and DHA.
Salman Ahmed,
You raised a valid point, a country who's per capita GDP is only around $1500 manages to have real estate prices already higher than USA. And believe me houses here look like shit compared to US. I call them cookie cutter chicken pans :) All thanks to the black money that elites politicians, businessmen, etc. Suck out of poor people of this country and then park it in real estate without any fear at all since they are the Government.
Overseas Pakistanis who work like slaves in those Arab countries has no choice but to build a house in Pakistan as their Muslim brothers there will never offer them permanent citizenship no matter how long they contribute to their economies and countries. With Pakistanis in US and UK its bit different, when things are good there they stick to invest there. Only time we saw a flood of investment was back after 9 11 when they were fearful of persecution in those countries. Now most of them are find and most of them cashing out and investing back in US and UK. My cousin recently sold all his property here and purchased a Gas Station in Chicago and doing very well making money there.
Salaried or working class in Pakistan can't even imagine to build a house of their own today. A friend of mine's father just retired from an agency and because he is an honest man he doesn't even have a house for him to go to after retirement. So they requested the department to allow him to stay in the officer's colony for little more time so they can figure out what to do next. Luckily they gave him 2 more years and still there is no solution in sight for this honest and hardworking, country loving man.
As far the crash in near future, it's already happening and in my opinion it has been triggered by the land mafia developers as cost of acquiring land has been skyrocketed for them and old formula of 4:1 land compensation is not feasible anymore and it is hard to attract new investor to pick up those files at high prices. These people have no morals and they don't care if poor people loose value of their real estate, they will do whatever they have to do. It's more like vicious cycle that they figure out for themselves. First they create fake booms like the one in 2013 and then follow by a bust.
Imran and Arshad both have correct explanation. In my view, Property crash cannot happen in Pakistan for the reason Arshad has told. But correction can occur which can be 5% to 15% depending on city, sectors and block. There is a factor of demand and supply. Presently demand is higher as more people move into to cities.
Land Mafia is strong and powerful specially in the current government environment.There is so much corruption and black money that it is easy make black into white buy buying real estate.so till 2018 i don't see sharp decline in the prices.
I don't see any property prices crash in near future in Pakistan. I think most of the forum members are either from Pindi/Islamabad or overseas. Our respected Rawalpindi forum members give opinion on the basis of prices in Pindi societies whereas overseas people evaluate the things on the basis of foreign countries parameters which does not apply here.
There is no doubt prices declined in Rawalpindi/Islamabad during last 1-2 years but the story in Lahore is quite different. Prices are continuously rising in Lahore from last 3-4 months. You can name any society DHA Phase 5,6,7,8,9 Lake City, Fazaia Housing, NFC-1, Valencia Housing, Wapda Town, Allama Iqbal Town, Sabzazar Scheme etc On the other hand Bahria prices are standstill & not going down like Pindi.
No doubt supply is more than demand in various places, thanks to so many societies but even then Massive infra-structure & road developments in cities lead to increased urbanization. Majority of the rich people from rural areas prefer to shift in cities for better education of their kids & better health facilities. Until Govt pays serious attention to rural areas, this urbanization wont stop & ultimately price rise in cities wont stop.
How many overseas would like to come back Pakistan & live rest of their life in rural areas? I think very few people
Our friend Salman Ahmed asked question, how can a normal person afford One Kanal house at 3-crore rupees. Bhai, who asked that normal person to buy only one Kanal house? People are even happily living in 5-Marla houses in Pakistan coz they own that house, they don't have to pay any rent. Similarly, 10-Marla House cost at 85-Lacs in Central Park Lahore whereas 10-Marla House in DHA Lahore costs at 250-Lacs. So choice is available, everybody can choose as per his buying power & people do it. If prices are increasing that means somebody is buying, if people don't have buying power then who is buying the plots / houses at higher prices?
Another factor in the stability of real estate prices are, no bank finance is involved here. In foreign countries, its major factor in property crash which doesn't even exist here.
These days Bahria issue is quite hot & hence people believe perhaps property prices will crash. One must remember that Bahria introduced gambling in property market & people earned/loose millions in overnight. Before investing there, everybody should have very clear understanding what he is going to do. Property investment is always long term 5-years+, its not matter of weeks. So, if somebody is doing wrong thing & wants to become rich in days, he should be ready to face the consequences as well. Instead of blaming developers, one should think about his greed first. All those people who invested in property for the time period of 4-5 years, they should not be worried because of current up/down situation. Everything would be resolved soon, as it happened in past. We must differentiate between property business & stock market.
These are just my personal opinion, may be I am wrong. Everybody has right to differ
@Irfan, first I like to thank you for very detailed and comprehensive explanation which is very relevant for overseas Pakistanies.
Secondly, could you explain more on the point that property evaluation criteria is different in Pakistan than in Overseas. This is very important and interesting point to understand the market dynamics in Pakistan.
By the way I am very new in this forum and based in GCC and want to invest some surplus money in Pakistan in near future.
So if a crash cannot occur in Pakistan then how we can explain the crash of 2008. Also Lahore is seeing a boom because looters from Lahore are in control of government and all the money that they are stealing from our country is ending up in Lahore market. Everywhere else it’s a negative trend.
Lahore is currently attracting the major chunk of development funds from both Provincial as well as Federal govt. An up trend in market is not surprising then. Overall though, in most areas market is sinking slowly, so it will take time for people to realize what is happening. A 10-15 percent correction seems like a good estimate.
Home is where your heart is…
Agreed with Imran, I am working overseas in one of the Arab countries.Most of the pakistanis in Arab countries like to invest in Pakistan.
Issue here is that land mafia in Pakistan want to be rich overnight and our corrupt politicians and their relatives are part of this mafia.
Earning and saving money is not that easy and in most cases it take a person to work 10-20 years outside Pakistan and he hardly saves 10-20 million Pak rupees and real estate people are playing with their hard earned money.
I think current real estate prices are not realistic at all and hope should be corrected as soon as possible.
Our economy is not good so 90% of our people rely on real estate business due to no other alternative option.