The fact that inflation has gone up. The inflation on raw materials has gone up. PKR rate is declining day by day.
Are these signs that the Real Estate would collapse similar to the way it did back in 2010? Are possession plots likely to be affected this time though?
Judging by your post, I don't think you are too much into economics :) But let me try and give you a simple indicator: Keep an eye on the interest rates (or the discount rate as it is called). Presently it is at 9%. My guess is that by the end of the month, there will be a hike in rates. 10%-11.5% is a nonresponsive interest rate corridor for our economy. If the rates cross 11.5%, the stock market will start falling and property prices will stop rising (or atleast not rise rapidly). Untill then, I think we are fine. So the simple rule is:
Interest rates less than 10 % = Good for Speculation Interest rates above 11.5 % = Bad for speculation
P.S. Dont get too confident on the rupee just yet, there is another IMF installment due on 26th August.
Syed amjad, firstly thank you for your contribution. Yes I don't know much about economics. But you are right that once interest rises real estate will be affected. Unsure about the 11.5% being bad? But that's what Im saying that interest rates have risen, cost of living has risen, pkr rates are declining, and these were the signs of what happened before and real estate did crumble back then so it wont be long until it happens again soon. Its just a question of time of WHEN? it could be in 6 months? it could be 12 months? its just a question of time really. The new government isn't helping either! just another government in place to fill there pockets up for next 5 years and make the country go in meltdown like every Pakistani government has done!
@Syed Amjad: You note about the economic aspects looks something interesting but I could not understand it. You do not need to draw a conclusion that I’m not well into economics… Its an already drawn conclusion:) Can you please find sometime to explain the concepts that you wrote so that novice like me can understand these concepts? thank you.
Actions of the PML n Govenrnment matters a lot . But let me remind u Real state market on Flourishes when others are declining . Once government decided to increase the discount rate, cost of doing buisness will go up and buisness would create extra losses as a result of which Enterpnuers pull that money out of buisness and invest in other sectors like Property Etc . So no need to be worry for next one year atleast.
I think real estate prices are actually on the low side because of law and order situation of Pakistan as overseas investment in property is discouraged by news of violence etc.
There will be upward correction of property prices as soon as law and order situation improves.
Well right now there is an artificial boom with prices so i think prices will drop, but the way things are going with the new government real estate will take a down turn first. Then it will gradually increase dependant upon whether social deprivation changes, crime rate reduces, inflation stops and economy grows. Time will tell!
Any more views?
Exchange rate is out the roof, record breaking for past decade. Wonder what impact this will have on real estate?
Latest news is that the IMF package has been approved and therefore, the general view amongst economists is that the SBP will maintain its policy interest rate at the current levels. If that happens, it would be a positive for the real estate sector. Lets see what happens over the weekend.
The interest rate now is 9.5 Percent, Real Estate prices will not stop rising, they can get stable in the coming months, Files might go down but the developed plots will not go down. Regards,