State Bank of Pakistan has decreased the interest rate from 8.0% to 7.0%. This is the lowest interest rate in the history of Pakistan. Last time record low interest rate was during the times of President Musharraf 2003-2005. According to the State Bank of Pakistan, this decrease in interest rate is due to the decrease in inflation rate. Inflation saw 2% decrease in the month of April 2015. Finance Minister Ishaq Dar has described this move as business friendly and an energizer for the stagnant economy.
Relation between Interest Rate & Real Estate Sector
Whenever interest rates are decreased, real estate sector activities pick up. This is due to the less interest being paid on the home loans. Another reason in Pakistan is that most people just park their money in Banks to get monthly profits. Due to the low interest rates, people get low profits on the deposited money. Therefore people just withdrawn money from banks and invest in businesses and real estate sector. This ultimately results in real estate boom.
Pakistan property boom of 2003-2005 was due to the record low interest rate
Pakistan property boom of 2003-2005 was due to the record low interest rate of that time. Interest rate was 7.5% from 2003-2005. People just started withdrawing money from the banks and invested in the real estate sector of Pakistan. Property boom of 2003-2005 is generally considered the greatest boom in the reality sector of Pakistan.
Another Property Boom in Pakistan
The low interest rate is what we need at the moment for the stagnant economy and real estate sector in general. Like last property boom of 2003-2005, people will now start withdrawing their money from the banks and will invest in the businesses and real estate sector. We are now heading towards another property boom in Pakistan. But this will not happen overnight. Market will start picking up by the end of this year. 2016 is a golden year for the real estate sector of Pakistan.