Effects of Budget 2013-14 on property market

The heated debate on Budget 2013-14 is on. The economists believe that this budget will bring along a storm of inflation and will affect the common man in dozens of ways. Some others however give the government credit on presenting the budget just on time and apparently doing so much with nothing left in Government’s treasury. At Zameen.com’s headquarter, we are analyzing the possible effects of budget 2013-14 on Pakistan real estate sector.

The increased tax on building material will certainly make it even harder for the 8 million plus homeless people in Pakistan to build or buy a house of their own any time soon. This will also increase the cost of finished units to a considerable extent and will directly affect the real estate sector of Pakistan. Because of increased taxes and higher cost of construction, the developers of residential and commercial units might get enticed to bring their construction quality down to meet people’s buying power.

With 0.5% increased tax on property transfer, along with “other expenses” the property buyer will now have to pay higher sums for property transfer as well. It was also proposed to the FBR to impose tax of Rs. 50 per square feet on the under construction commercial property and Rs. 100 per square feet on the developed one. In addition to that, if the same tax is imposed on the residential property units, the owner of 1-kanal house would be required to pay tax of more than Rs. 200,000. The tax ratio will be the same for constructing a 10-marla double storey house.

The proposed pointers of this budget will harm the construction sector in Pakistan and also hamper the growth of the real estate sector. With more property taxes announced in Budget 2013-14, the investors and agents might have to deal with the prevailing and possible problems more aggressively.