Buy Or Wait

Buying Property Buying Process
#1

It is always good to be cautious and careful when buying property. Consideration and comparison of all options in the affordable range is a must.

But should you wait for prices to stabilise? For budget to be announced or to be passed? For the effects of budget to show up?

For someone who has his saving in local currency, i would advise not to wait for all of these things. Wherever you buy, even if you have bought for rs 50,000 or rs 1 lakh extra (more expensive) - no problem. Excessive waiting will take the price of the same plot beyond your reach or above your budget.

No matter what people say and discuss, prices are rising. The reason simple, the rupee is losing its value against the dollar, so the owners will not sell at the same price after a few months. If they do they are making a loss while the demand is increasing. Makes no sense.

However, if you are an overseas Pakistani and your savings are in a solid currency such as dollar, pound, riyal or Dirham, then perhaps you can wait a little. But even then you should not wait too much. You can see that prices are rising at a faster speed than the speed at which your foreign currency savings are gaining against the rupee.

Secondly, we are all hoping that the decline of the rupee will be slowed down or stopped by the new government through its pro-business policies. But a lot will depend on the law and order situation. If there are no unfortunate incidents or sectarian violence, then the rupee will hold its value. Otherwise, mian sahab will find it an uphill task to stabilise the rupee.

In my view waiting too much for buying real estate is not a good idea except if your savings are already invested in a profit making enterprise.

#2

Dear pk1,

I totally agree with your views.

Keeping your money in the banks, is totally worthless, as the value of money is decreasing very fast.

Investment in safe societies is very good option to maximize on your savings.

Yes, it is right buying a good plot on a little higher side price is not a bad option at all, it become negligible in the long run.

Thanks

#3

Buying small properties is never a bad choiice inshaallah. Big properties ( kanal and above) could be risky and worth a wait given increasing taxing tendencies in the coming future.

#4

I agree with Pk1's advice that one should not wait for the prices to come down and should invest instead of waiting.But finding right property to invest is the key.Fins right undervalued property to invest.And do your research before buying.

Keep in mind, every property is not increasing, only selected properties are rising.And this is also a fact that buyers has been reduced in may and june and buying activity might be limited for the month of Ramazan too.

#5

@ sinful, your right but also the bigger the investment the bigger the return, so don't think kanal is risky, it all depends upon how much money you invest and what type of reputation the society where your investing has?

@ pk1, excellent analysis. Also another interesting point is that... People may want to wait to invest as they would be waiting and looking at the market after a couple of months to see the governments actions. Most investors have faith in the gov at the moment like they did when they voted zardari, but once the new gov makes some rash decisions, how would people react? Would this increase or decrease property prices? This is what people are looking at, and perhaps waiting to see what happens...only allah knows... pray for the best!

at the moment their appears to be too much bombings, which seems to have a bit of a bad affect on the county as well as real estate, as people don't seem to have the confidence to invest, they are waiting to see if things improve under the new gov.

#6

Waiting is better at this time :slight_smile:

#7

Agreed with mbs :)… Recent events in karachi, balochistan and kpk didn’t give any good signals for investment …

#8

...But at the same time people think that prices will rocket in islamabad as they feel now is the best time to invest as the real estate prices in islamabad appear to be increasing rapidly depending upon location so people think islamabad will become similar to lahore in the sense that you will only be able to buy a 5 marla plot for atleast a crore and that even maybe in the slums of islamabad.

Astute investors would wait and see the market and what happens in the upcoming months, however, others may think otherwise

also Ramadan is approaching fast so I think their will be a frozen gap in the market and then prices will start to pick up straight after.

#9

Cda development will also affect the prices of islamabad, if they starts new sector developments the other will get a price hike too.

#10

During the ramzan, i think the market will slow down and just after eid the activity in the market will be at a better pace. Different people have different mind set, some will wait for the market trend to get stable, some will buy now, so its all personal preferences. Thanks

#11

Assalamualikum warehmatullahe wabarakatuhu,

In 9 months, the prices has raised too much. The price of 8 and 10 marla plots are now of 5 marlas (esp. Cda sectors) and much more. The cost of construction has also raised up. So now 5marla home is above 1 crore.I don't know, how people can invest this much when development everywhere is going slow also. Isn't this a peak or there are more peaks to come?? I am also confused to invest now or wait.. In zardari time also, the prices fell too much. Now let see what will happen??

#12

(1) sometimes i think it is a real estate bubble ... Just like any other bubble which was created deliberately or not deliberately (such as .Com bubble in 2001, oil prices bubble in 2008 etc). If it is a bubble, then don't know when it will be bursted and how much lose has to manage.

(2) many people say that because of the bad situation in other parts of the country people are moving into lahore, isb and karachi which is causing increase in prices ... But this situation has been there for 5-6 years. Plus people moving from trouble areas are not highly rich to afford housing in cda, defense-lahore and karachi etc. Trouble areas are already backward areas... Where people are not rich. This argument (that people moving from trouble areas) is not valid and i would void this.

(3) it could be another reason that many politicians brought their black money from other countries into pakistan as white money by paying some percent of tax. Millions of rupees by these politicians might have injected into real estate which caused increase in prices. But this assumption could be wrong.

(4) one more reason could be that energy crises in pakistan causing people to invest in real estate.

(5) capitalisim making people who are middle class to upper middle class and upper middle class to upper class, causing them to buy plots for their dream home which they could not dream before. But this percentage should be very small to ignore this option because of particular pakistan economic condition.

Personally i think it is a real estate burst created deliberately like other previous ones.

#13

(1) sometimes i think it is a real estate bubble ... Just like any other bubble which was created deliberately or not deliberately (such as .Com bubble in 2001, oil prices bubble in 2008 etc). If it is a bubble, then don't know when it will be bursted and how much lose has to manage.

(2) many people say that because of the bad situation in other parts of the country people are moving into lahore, isb and karachi which is causing increase in prices ... But this situation has been there for 5-6 years. Plus people moving from trouble areas are not highly rich to afford housing in cda, defense-lahore and karachi etc. Trouble areas are already backward areas... Where people are not rich. This argument (that people moving from trouble areas) is not valid and i would void this.

(3) it could be another reason that many politicians brought their black money from other countries into pakistan as white money by paying some percent of tax. Millions of rupees by these politicians might have injected into real estate which caused increase in prices. But this assumption could be wrong.

(4) one more reason could be that energy crises in pakistan causing people to invest in real estate.

(5) capitalisim making people who are middle class to upper middle class and upper middle class to upper class, causing them to buy plots for their dream home which they could not dream before. But this percentage should be very small to ignore this option because of particular pakistan economic condition.

Personally i think it is a real estate burst created deliberately like other previous ones.

#14

I have been told by many property dealers to wait! They said properties in lahore has risers all of sudden without any solid reason. Few of them went double. It’s all cuz of foreign pakistani investors. They are bringing lots of money and buying property.Nthey don’t know the real rates. I will wait and see what’s gonna happen. There are many societies who raised their prices so much, no couple of lacks but in millions which is not appropriate.

#15

Ajmal bhai, housing societies have not raised their prices.

There are individual sellers in the market who are selling their files and plots. They do not ask the society what the asking price of a plot or file should be. Only in case of initial booking can societies determine the initial price.

At the moment prices of plots is determined by market forces of supply and demand. You have rightly pointed out that overseas pakistanis have invested some capital in pakistani real estate after the elections for the reason of high expectations attached to the new government. However, the latest unfortunate incidents of bombings in the country have put many investors on hold.

However, the bold investors will continue to make solid investments such as plots in developed schemes or where development is nearing completion.

Such daring investors who are buying now will get the maximum benefit in the mid term and long term scenarios. But people looking for a quick profit in a short time span of 2-3 months may want to wait for the current wave of terrorism to end insha.Allah.

Otherwise, there is no bubble in real estate. The price increase is not as massive as it seems as it is linked to the massive slide of the rupee against the dollar. The price increase is a market correction due to the following forces:- - (i) to maintain the real value of the properties (against devaluation of currency and global inflation); and - (ii) to account for the actual increase in demand due to population growth as people increase in numbers and move from small towns and villages to the big cities.

If we follow the graph of real estate prices in the major cities, you will see a continuous upward trend (except for minor downward kinks on the way). Even during the worst economic performance and law and order situation of the previous government, prices have increased in real terms in addition to corrective action for devaluation of the rupee.

But where to invest is the key. My advice is to go for solid fully developed societies with good road links (where too many people have not yet moved in) and prices are still below those areas where massive advertising has pushed up the price graph. You will be safer not to invest in files especially where the society has not fully acquired the land.

Personally i prefer solid well-located schemes as opposed to those which are inflated by tv advertisement campaigns.

#16

Thanks pk1.

#17

I liked this part of pk1's advice specially,

"but where to invest is the key. My advice is to go for solid fully developed societies with good road links (where too many people have not yet moved in) and prices are still below those areas . You will be safer not to invest in files especially where the society has not fully acquired the land.

Personally i prefer solid well-located schemes as opposed to those which are inflated by tv advertisement campaigns."

#18

@pk1 Always helpful analysis, massive thanks!

Just saying: I lived in uk many yrs. It is better to buy plot in london rather in islamabad zone 1, as both have roughly the same price, though rupee is going down everyday compared to pound.

#19

Thats amazing. Both london and islamabad on same price

#20

Dear pk1 Thanks for sharing such a knowledge with us. Now a days sale purchase in isb zone 1 and 2 is very slow prices are stuck in few sectors prices became down but we have to note one thing that in islamabad specially in zone 1 and 2 from last 3 years in summer prices became down or stable specially from june to august due to financial closings, budgets, ramdan mubarik eid event plus this is fact that our tough weather conditions. But after eid again sale purchase starts in market, and then near to eid ul azha market charges up till end of feb or march. And we always forget a point that property prices depends alot on supple and demand formula, now a days supply is more then demand if some one have money he should buy before eid ul fitar as rates are down sale purchase is slow but try to make investments in genuine sectors with credible management.

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