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Effects of increased interest rates on Real Estate in Pakistan

Posted on February 4, 2018 by Bader Munir in Comercial, Forecast, Interest rates, Real Estate

Pakistan real estate market has one more set back in the form of increased interest rates. State Bank of Pakistan has revised the interest rates. It has increased from 5.75% to 6%. Though it’s a very nominal change but still have effects on many businesses especially real estate.

Why real estate ?

Real estate market wholly solely depends on investor’s long term saving plans. If banks start paying higher interest on savings, investors will have an other option to park their investments . Most of them will consider it more secure and handy than real estate transactions. This will result in decline of property prices due to less demand.

Look back

20 year interest rate

Source: State Bank of Pakistan and Trendingeconomics

If we look at the past 20 years in graph,it’s clearly visible that interest rates were at lowest in 2003-2005 and 2015-2017. Those two eras were the golden time for real estate business. 

Forecast

As we discuss categorically about real estate situation in our previous blog. we consider, hike in interest rates is not a healthy sign for real estate entrepreneurs. Property prices are still in recovery stage and rise in interest rates will slow down the recovery process. 

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One comment

  1. Real estate business has a big role in your society. The value of property are becoming higher. And that’s a good news for real estate agents.

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