How Much House Can You Afford?
Home affordability calculations
Houses are highly unaffordable in Pakistan. First reason of abnormal property prices in Pakistan is the fast rise of inflation than wages. Second reason is the shortage of housing as we need more than 10 million new units. Third and major reason is the influx of black money in real estate sector which has artificially increased the property prices.
What is the world affordable house price to income ratio?
World affordable house price to income ratio is 5:1. According to this ratio a person can buy a house after spending 5 years of income. But in Pakistan it’s approximately 14:1 which is highly unaffordable. The worldwide house affordability map can be viewed @ NUMBEO. (Click on the colors to find affordability ratio).
What house your salary can buy in 2017?
Single salary:
Earning per month = Rs. 15,000/-
House one can buy = 9 LAC
Earning per month = Rs. 25,000/-
House one can buy = 15 LAC
Earning per month = Rs. 50,000/-
House one can buy = 30 LAC
Earning per month = 1 LAC
House one can buy = 60 LAC
Two salaries: (In case both partners are working)
Combined earning of a working couple per month = Rs. 30,000/-
House they can buy = 18 LAC
Combined earning of a working couple per month = Rs. 50,000/-
House they can buy = 30 LAC
Combined earning of a working couple per month = 1 LAC
House they can buy = 60 LAC
Combined earning of a working couple per month = 2 LAC
House they can buy = 120 LAC
Pakistan housing market is in bubble phase
People or couples with 2 Lac per month salaries can buy just 5 Marla or 125 square yards house. This shows that housing is highly unaffordable in Pakistan and is in bubble zone ready to bust soon. Either prices will be down or we will see massive rise in salaries. But it’s better if government starts affordable housing developments, otherwise homelessness will increase in Pakistan.