How the Housing Trends in Pakistan Have Evolved?
How the inflation, technology, and the Covid-19 pandemic has shaped the housing sector in Pakistan.
Housing trends have shifted around the world, since the dawn of the century and especially after the Covid-19 pandemic. Pakistan being one of the developing nations with its unsteady economy has had a hard time coping with the continuously developing housing market until recently. The housing sector harbors a massive potential for growth in the country, which the present government intends to cash in on.
Despite the hard struck pandemic, there has been a steady growth in the housing and construction sector in the country. However, there is still a huge absence of affordable homes in the entire residential housing ecosystem of the country that demands to be filled as soon as possible.
Current Status of the Housing Market
Pakistan’s housing market, especially the supply side, has been overlooked by the previous governments. This has significantly widened the demand and supply gap between consumers and the housing sector. According to an estimate, the country is facing a shortage of 11 million residential houses. This acute scarcity adversely affects the living conditions of a wide segment of the populace.
The pandemic made it unclear whether the housing market of the country will continue to soar, or will show a decline. Miraculously, however, Pakistan has witnessed a major rebound in the real estate industry during and after the Covid-19 lock down. The massive boost in the year-on-year sales growth of cement and steel conforms to the fact.
Innovation and technology have also played an important role in introducing people to online real estate platforms. Websites like Zameen.com and other such online platforms offer streamlined and easier solutions for buying and selling properties between people. This has greatly emphasized the notion that housing carries viable investment opportunities compared to other sectors due to its higher value and increased ROI.
How Inflation has Impacted the Housing Trends?
Like other businesses, the housing sector has also witnessed detrimental effects due to the peaking inflation. Under the current scenario, Pakistan is facing a huge house affordability problem due to a major price hike of the properties. Consequently, the gap between the demand and supply of houses continues to increase with an addition of 350,000 homes per annum. The scarcity of houses has contributed to 12.17 percent inflation in the property prices in FY21 on a year-on-year basis.
However, inflation only has a small part to play in the matter. Experts believe the rising house prices due to rising inflation is no more than an illusion. According to Zameen.com, house prices across the country have increased by 5.05% per square foot in the Q1 of 2019 in nominal terms. But given the high rate of inflation, the prices have shrunk by 3.98% in the same period.
As per the data collected in the 2020 housing prices in Pakistan’s major cities were:
· Lahore — The average cost of a house per sq. ft. in Q1 of 2020 rose 6.25% to PKR 10,402 (US$ 73) compared to the previous year. But when adjusted to inflation, the prices contracted to 2.89%.
· Islamabad — The average price of a house per sq. ft. in the first quarter of 2020 increased up to 7.01% amounting to PKR 9,985 (US$ 70), from the previous year. But was down 2.2% after being regulated for inflation.
· Karachi — The average cost of a house in the city was noted at PKR 13,158 (US$ 93) per sq. ft. a 4.25 % increase from 2019 which turned out to be 4.62% lower after adjusted in terms of inflation.
How the Current Government is Tackling Housing Issues?
Considering the alarming situation of housing needs in the country, the current PTI regime is paying special attention to tackle the issue. Prime Minister Imran Khan launched a major initiative; Naya Pakistan Housing and Development Authority (NAPHDA) to ensure the availability of affordable homes to the financially unstable section of the population.
NAPHDA is on a mission to construct 5 million affordable houses out of which 1 million homes are set to be constructed within their 5-year tenure. The project is targeted towards the lower and middle-income class segment of the society that has been overlooked by private and governmental institutions in the past.
To ensure the timely completion of the project, NAPHDA is collaborating with federal and provincial authorities as well as the private sector. If the government succeeds in completing the project, it will be major progress towards closing or eliminating the residential housing deficit in the country.
Growing Investment Trends in Housing Industry
Housing is one of the widely debated topics in the country that has amassed both foreign and local investments over the years. Considering the shortage of houses in the country, the prices of real estate properties and houses will continue to surge. Which makes it the perfect time to invest in the market and get better returns.
From a foreigner’s perspective, Pakistan’s housing is one of the hottest real estate markets in the world that can offer massive returns on investment. Due to the recent devaluation of the rupee against the dollar, the country has become one of the cheapest markets out there in terms of real estate investment.
Final Verdict
No doubt, Pakistan’s housing sector is suffering from major issues like inflation, land titling, illegal development of residential societies. However, with the current government’s focus on providing a respectable and affordable living for the neglected segment of the populace, they intend to reshape the entire real estate industry of Pakistan. As the construction industry is gradually picking up the pace, there is a massive potential waiting to be utilized in the country.
