Ruthless Accountability has Crashed Property Market
Pakistan was perhaps the only nation where corruption was the mark of success whereas honesty always led to degradation. But things have started moving in the right direction as SC and NAB have started the ruthless accountability. Now everyone will be questioned about the source of income as no one can hoard assets beyond means. This move has huge impact on real estate sector. Let’s see how Ruthless Accountability has Crashed Property Market.
Crack down on black money
Black money has been blocked from reality sector due to the ruthless accountability. Now people with black money cannot buy property as they will be asked about the source of income. Due to the low investment in reality sector, property prices are falling. Sellers are reducing the asking price but still no buyers in the market. Luxury property is the real victim as owners want to sell immediately to minimize the losses.
Dubai property sector describes the effects of black money crackdown
Everyone knows that its not easy to park the illegal money in any country due to the New Amnesty International Laws. Dubai reality sector is the biggest victim of those new laws. Dubai and London reality sector was famous among the top black money heavens. Due to latest international laws about black money, Dubai real estate has crashed to a level never seen in any other part of the world. Property prices in Dubai are just 25% of what they were in 2008. Pakistan will see the Dubai style property market crash where prices will be stagnant for years after the crash.
International real estate markets trends
The world is known as global village where one event leads to another. So markets rise and fall together. The American sub-prime mortgage crisis started the worldwide house price crash. Many experts say that property market has global connections as property price rise in one region results in the global property price rise and vice versa. Currently property prices are falling from Sydney to New York. The situation is same in Pakistan as property prices are falling. But Pakistan will be the worst hit market as now black-money can’t enter the reality sector.
Effects of the construction of 5 million affordable homes
First time in history of Pakistan the government looks serious to solve the real issues. The government has already started working on the construction of 5 million affordable homes for the people who are homeless or living on high rents. This is why mafia is against the new government as their hold on property sector is losing. According to NAB there are 1000’s of illegal housing schemes in Pakistan. Why people buy expensive homes in illegal societies when government is building affordable homes that will be available on less price than the open market.
Situation of dealers, buyers and sellers as ruthless accountability has crashed property market
Realtors views about Pakistan Real Estate Market Situation:
According to the real estate agents this is the most busy time of the year as foreign Pakistanis visit homeland during summer holidays. Pakistani expatriates also invest in reality sector. But this year is very different as most expatriates are just observing the market which is falling day by day. Property dealers say that zero tolerance for black money and 5 million rupees buying restriction for non fillers are the major causes of the mess. Many dealers are living hand to mouth because of record low real estate transactions in 2018. Approximately 40% real estate agents have closed their agencies.
Buyers views about Pakistan Real Estate Market Situation:
Buyers are in the driving seat. Most buyers and investors are in touch with the market and regularly checking the prices. Buyers know that market is down so they are not in hurry. They want the market to bottom out first so they don’t lose any money. Buyers are making the low offers so that they can buy property only on the investors rates. This situation is because properties are more in the market as compared to the buyers.
Sellers views about Pakistan Real Estate Market Situation:
There are the two type of sellers in the market; experienced sellers and inexperienced sellers. Experienced sellers have seen the property crash of 2005-6. Therefore they have reduced the prices to sell property as early as possible. Even some are happy to sustain the loses. But on the other hand inexperienced sellers want to sell property at some profit which is not happening in the near future. Another real issue of the sellers is the low offers and inquiries as non filers are not interested to invest black money in reality sector. Everyone knows that black money will be chased to hell.
How Pakistan property market will behave?
Forget about the 5 million property buying restrictions and focus on who can buy property in Pakistan. Pakistani state was nearly destroyed by the nexus of corrupt people and property mafia. This resulted in heating the property prices. But now things have changed as no one can dare to buy the property with black money. This new trends will totally crash the high end market that survived on black money. So small size affordable properties will be in high demand.
Pakistan real estate price trends
Property prices are continually falling since 2016. Now prices are approximately 30% down from peak of 2016. But this is not the end of story. Prices are heading towards another 30-40% crash. Total price crash from peak of 2016 will be 60-70%. There is no real demand since 2012 as price rise was just due to the massive black-money investment. New government has zero tolerance for black-money so we can already see the death of luxury property market in Pakistan. Property prices will go back to the level of 2012/13. But small properties will be in good demand due to affordable prices.
Best time to buy property in Pakistan
The wait to buy property is not over as real estate prices are still falling. It will take some time for property prices to be bottomed out. This will be the time to start buying, as genuine buyers will get the record low price offers. Property crash always takes some time to complete as it’s a slow process. Hopefully prices will bottom out by the end of this year or the start of next year.