The National Consumer Price Index (CPI) for August 2022 showed a rise of 27.26% over August 2021, according to the Pakistan Bureau of Statistics. The research also noted that during this time, Urban CPI increased by 26.24% while Rural CPI increased by 28.79%.
Additionally, the cost of food has increased dramatically, making it challenging for people in lower and moderate income brackets to purchase meat, chicken, lentils, vegetables, and milk. The cost of gasoline and electricity has also significantly climbed.
It goes without saying that the effect of inflation on real estate has also become very clear. The cost of homes has also risen in Pakistan since there is a direct link between inflation and the housing market. A lot of potential homebuyers have switched their focus from building homes to investing in flats as the latter is better adapted to respond to inflation and offers a high ROI as a result of the rise in the cost of home construction.
sensible choice during an inflationary period
Originally, purchasing real estate has been thought of as an inflation hedge. A sensible choice during an inflationary period could be to invest in real estate because home values typically rise along with prices. Your budget may suffer if you don’t know where to begin your home search when your income isn’t increasing at the same rate as the cost of living.
Therefore, if you want to buy a house despite the current circumstances, here are some suggestions that could help you get the best deal while minimizing the impact on your bank account.
3 THINGS TO CONSIDER WHEN BUYING REAL ESTATE DURING INFLATION
Has the question, “Is real estate a smart investment during inflation?” ever crossed your mind? Then, absolutely, it is correct.
Even while it may be difficult, buying a property in such unsteady circumstances is surely not impossible. Here is a list of tips that might help you lessen the effect of inflation on real estate, since this blog is committed to offering its readers the best property solutions.
LOOK FOR REASONABLE AREAS PROPERTIES
Investing in housing societies or upscale neighbourhoods may be the top choice among people seeking to live well, but doing so may prove challenging if real estate prices are increasing faster than your annual wage or other source of income.
As a result, you should think about reevaluating your options and needs if you intend to buy in real estate during an inflationary period. Consider purchasing a home in a property hotspot rather than putting an excessive amount of emphasis on high-performing neighbourhoods. These high-yield locations are frequently next to well-known performers. Since they are still in the development stage and only have a small population, their real estate values are significantly lower.
SELECT THE CORRECT KIND OF PROPERTY
Investing in housing societies or upscale neighbourhoods may be the top choice among people seeking to live well, but doing so may prove challenging if real estate prices are increasing faster than your annual wage or other source of income.
As a result, you should think about reevaluating your options and needs if you intend to buy in real estate during an inflationary period. Consider purchasing a home in a property hotspot rather than putting an excessive amount of emphasis on high-performing neighbourhoods. These high-yield locations are frequently next to well-known performers. Since they are still in the development stage and only have a small population, their real estate values are significantly lower.
PRO TIP
- Because purchasing a land and building a house at a time of inflation can be expensive, you might want to consider slightly older buildings that only need minor upgrades. Our article on the pros and cons of purchasing a new home versus an older home will assist you if you have any additional queries.
SEARCH FOR UNDERVALUED HOUSES OR FIXER-UPPERS
Expanding your search for houses that need work and those that are currently undervalued is another advice for buying real estate during an inflationary period. Even though this can be a little challenging, dealing with a reliable real estate agent can speed up the process of finding great deals.
But if you don’t approach carefully, buying fixer-uppers can be a slippery slope. A house with significant damage may cost you far more to repair or renovate than you had anticipated due to the escalating costs of labour and construction supplies across Pakistan. Therefore, before making a decision, be sure to engage a professional to perform a full property inspection and balance all of your pros and disadvantages.
If you intend to patch them up and sell them for a profit, purchasing fixer-uppers in an atmosphere of high inflation might be a wise business decision. Making a few minor improvements to an undervalued home can help you sell it for a greater price on the market, even if this may entail a lot of labour. However, if you don’t want your endeavour to fail or result in a significant loss, be careful to avoid the usual mistakes made when flipping houses.
Conclusion
In conclusion, considering the relationship between inflation and the housing market, it can be challenging for purchasers to find the home of their dreams within their allocated budget. But if you stick to these fundamental suggestions, you should be able to avoid the effects of inflation on real estate. Just be sure to perform your homework, comprehend the most recent real estate trends, and reevaluate your budget before signing anything.
