Historic low interest rate in Pakistan @ 6%
State Bank of Pakistan has decreased the interest rate to 6.0% from 6.5% on 12th of September 2015. This is the record low interest rate in the history of Pakistan. State Bank of Pakistan has decrease the discount rate to 6.0% due to the decrease in inflation. Pakistan inflation rate was recorded 1.72% during August 2015. Many people have different opinions about this decrease. Some people say it is to appease the farmers and business community, while others say this decrease is to win the local bodies elections. But one thing is for sure, low interest rate is always helpful for economy and real estate sector.
Relation between Pakistan real estate sector and interest rates
There is a great relation between low interest rates and real estate sector of Pakistan. Whenever interest rates are lowered, we see great surge in real estate activities. Greatest property boom in Pakistan occurred during 2003-2005. This was due to the record low interest rate at 7.5%, historic low of that time. People at that time just withdrew money from banks and invested in business and real estate sector. This ultimately resulted in the greatest property boom in the history of Pakistan.
Low interest rate is what we need for the stagnant real estate sector of Pakistan
Pakistan real estate sector is stagnant now-a-days. This is due to the political uncertainty. Even the summer season, when overseas Pakistanis visit Pakistan and buy properties, could not uplift the real estate sector. But now there is a ray of hope as majority of Pakistanis will invest in businesses and real estate sector due to low profits on their fixed deposits. This will help the economy and real estate sector to grow. Next 6 months will see great rise in real estate activities that will bring another property boom in Pakistan. This is the right time to invest in real estate sectors to earn high profits in the near future.