Effects of Inflation on Real Estate Housing Market in Pakistan
Pakistan is in the midst of the worst economic crisis in history, with inflation at an all-time high. The poor economic policies of the past have brought the nation to the verge of bankruptcy and economic catastrophe. In recent months, the price of every commodity has skyrocketed, rendering them unaffordable.
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In addition to other necessities, the price increase has a significant impact on the country’s housing market. The prices of land, flats, apartments, houses, and farms have risen significantly. Inflation in any country has both positive and negative effects on the real estate market. Examine the positive and negative effects of inflation on the Pakistani real estate housing market.
Positives of Inflation on Real Estate Housing Market in Pakistan
Increase in Property Value
One of the main advantages of a price increase in Pakistan’s real estate market is that it increases the value of property. It indicates that the owner will benefit from an increase in the value of the portion of land. According to the most recent statistics, a property purchased for one million rupees in 2018 may now be worth between five and six million rupees.
Rental Surge
As a property’s value rises as a result of inflation, the owner will eventually have a golden opportunity to increase the rental charge. The price increase in the country’s real estate market has diminished the purchasing power of the populace; consequently, the demand for rental residences has increased. It has also led to an increase in rental fees.
Negatives of Inflation on Real Estate Housing Market in Pakistan
High Rates of Construction Material
Inflation in any nation affects all industries, including the construction industry. Consequently, construction material costs also increase. Recent inflation in Pakistan has increased the prices of construction materials such as bricks, cement, steel, iron, etc. As a result, it has become increasingly difficult for individuals to build their own homes for a living.
Diminishing Purchasing Power
Inflation in Pakistan has diminished people’s ability to purchase real estate. In this period of economic decline, it is difficult for individuals to make ends meet. Therefore, purchasing land in any region of the nation is a pipe fantasy for many.
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