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Why property prices are sky high in Pakistan?

Why property prices are sky high in Pakistan?

Average salary in Pakistan is PKR 300,000 per year, but average house price in Pakistani is PKR 500,000. According to the world house affordability level, average house price to average annual salary is 1:5, where as in Pakistan its 1:17. Common Pakistanis cannot afford to buy property in Pakistan. But billion dollar question is why property prices are sky high in Pakistan? Simple answer is that property prices are sky high due to influx of black money in reality sector.

Black money circulation in Pakistan

Black money is one which is earned from irregular or illegal means. But according to the government, money that is received in cash through underground economic activities, and is not taxes, is the black money. Government officials say black money in Pakistan is approximately 20-25% of the real economy.

Why black money in reality sector?

Black money and real estate sector has long history of love affair. In Pakistan and many other countries, real estate sector was one of the best sources to whiten the black money. Property prices are dictated by the purchasing power of buyers. When people have more buying power prices does increase and vice versa. But when black money enters the reality sectors, it massively increase the property prices and in most cases way out of the affordability level of genuine buyers.

Reality sector without black money

Black money curbing has always positive impact on property markets. Firstly, without black money, property prices fall. Secondly, it makes properties affordable for masses. Thirdly, real estate transactions increase as people start buying properties. Fourthly, realtors get good business due to increase in real estate transactions.

Unless the government curbs the black money, property prices will keep on rising. Genuine home buyers will be unable to buy homes.

Recommended:
Pakistan property tax 2016-17

(10) Comments

  1. The prices are rising because of the Pak-China corridor. The opportunities are emerging with every passing day. This corridor will definitely lead to a blooming industry and future for Pakistan.

  2. Muzammil

    on   said 

    Panama case se kia ga. hamare mulq main corruption khatam nahin ho gee. ghareeb na ghar le sakta tha na le sake ga.

  3. Moman Enaam

    on   said 

    good article. propety prices are only affordable in Gwadar. Can you tell me latest good housing society in Gwadar?

  4. junaid wasti

    on   said 

    no genuiene honest person can buy property in Pakistan. now finally panama case decision will be announced on 21st April. What will be its effects on property prices. please tell us in details. any hope for genuiene people like us?

    • junaid wasti
      Property market will be affected by Panama Case Decision, its true.
      But its very early now.
      We will write i detail only after the Panama Case Decision is announced.

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