The price of property is decreasing around the world due to economic recession. But in Pakistan, there is no sign of a decline in property prices because of its manipulation by investors, the intervention of politicians, and other malpractices. A plot filing system increases the property’s price without being driven by demand, leading to speculation in the real estate sector. The plot filing-induced speculation does two things, i.e., initiation of a complex price determination system and promotion of cash economy.
The investor keeps the plot filing until its price increases to manifolds, and no one cares about the DC rate. Under these circumstances, the availability of affordable housing will be affected, and demand will increase. It reflects that high property price is not because of actual housing demand. In countries such as Australia and UAE, the realty sector price is directly linked with economic indicators. But in Pakistan, economic indicators seem to have no power to bring down real estate prices. At times, people do not have savings to invest in. The market suffers from low demand, but the prices keep on increasing.
The mispricing of the property can be tackled by building a Pakistan Property Institute, as it will set the property price according to market rates. Spatial planning can be the solution as all the stakeholders will be involved in the decision-making process. The digitisation of the property valuation system will reduce the exploitation of the buyer. The rule of law and implementation of RERA will help abolish the unfair intervention of political authorities in determining the value of a property. Finally, removing unlisted companies from the real estate sector must be considered to prevent them from getting involved with development companies to constitute illogical prices.
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