How Lowering Interest Rates in 17.5% Will Boost Pakistan Real Estate Market Recovery in 2024
Pakistan’s real estate market has experienced tremendous growth over the past decade, with significant profits for investors during peak periods. However, in the last few years, particularly from 2022 onward, the sector has faced notable challenges due to various factors.
Reasons for Market Decline
The real estate market suffered a downturn primarily due to economic instability, driven by political uncertainty. Many overseas Pakistanis, traditionally key investors, withdrew their investments, further exacerbating the decline. The lack of trust in the political and economic situation discouraged local and international investors from committing to long-term projects.
Additionally, housing societies that either mismanaged or abandoned their projects caused financial losses for many. Buyers became increasingly wary, learning from past mistakes and approaching future investments with more caution .
Housing Shortage Despite Market Struggles
Despite the overall market slowdown, cities like Islamabad continue to face a housing shortage. Population growth, particularly in urban areas, has kept demand relatively stable. The pressure for affordable housing remains a key issue, underscoring that the real estate market still holds potential for growth.
Interest Rate Reduction and Positive Impact on Pakistan Real Estate Market
A positive sign for the sector is the recent reduction in interest rates by the State Bank of Pakistan, from 19.5% to 17.5%. There are projections that the interest rate may further decline to around 13% in the coming years. This development is expected to encourage people to withdraw their savings from banks and reinvest in real estate, which could revive the market.
Gold Investment and Real Estate
While some investors shifted their focus to gold, the returns were not as lucrative as expected. As a result, real estate is likely to regain its attractiveness as an investment option, particularly as the economy stabilizes and interest rates drop .
Conclusion
Despite recent setbacks, the real estate market in Pakistan is far from over. The demand for housing, coupled with an expected boost in investments following interest rate reductions, suggests that the sector will recover. Investors, now more knowledgeable from past experiences, are likely to approach future projects with greater care, helping to stabilize and potentially grow the market once again
This cautious optimism highlights the potential for long-term growth in the real estate sector, especially if political and economic conditions improve