Top 8 Factors Affecting the Real Estate Market

Factors affecting the real estate market

You must have heard about the rapid growth of the real estate market in Pakistan.

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Real estate investment is one of the most profitable and lucrative investment opportunities in Pakistan. Due to the unique nature of the benefits it offers, people are investing in real estate projects and securing their money for the long term. There many construction companies developing real estate projects in which you can invest in. 

Through real estate investment, you are not only gaining good returns but you are also getting a tangible asset of your own in a safe, secure, and risk-free manner. 

What else do you need in an investment?

Nevertheless, an important pointer that must be kept in mind before making a Real estate investment is that it is not a haphazard thing – it is a science. There are certain factors that affect the real estate market and these factors either make or break the real estate market.

Factors Affecting the Real Estate Market

Here is our list of factors that shape and develop the real estate industry. We hope you find this a profitable read.

  1. Demographics of the Country
  2. Interest Rates on Loans and Property
  3. The Economy
  4. Government Policies Matters
  5. Employment Opportunities
  6. Trust in the Market
  7. External Investors
  8. Budget of the Country


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 1. Demographics of the Country

According to the Cambridge dictionary, demographics are:

“The number and characteristics of people who live in a particular area or form a particular group, especially in relation to their age, how much money they have, and what they spend it on.”

There are certain categories in demographic data that may have a direct effect on the real estate market. 

For example, the age group and socioeconomic status of the general population.

If the people are earning well and they belong to the middle class, upper-middle-class, and elite class, they will have a positive effect on the real estate market of the country.

The reason behind this positive trend is because these socioeconomic classes have high purchasing power which means high sales for the real estate market.

 2. Interest Rates on Loans and Property

People despise high taxes and interest rates on property and for all the valid reasons. It is an expense for them which they want to minimize. 

Interest rates play a crucial role in the development and growth of the real estate market. If the government is charging high property taxes, people will become reluctant while investing. They will not buy real estate because of high taxes, rather, they will look into other small business ideas in Pakistan. They might even consider illegal means to invest in real estate, just to get away with taxes. 

However, if the government is providing tax credits to property holders, the property sales will eventually spike. 

Similarly, if the banks of the country are giving out loans on easy terms and conditions, people will get loans and invest in real estate. Luckily, Pakistan is one of those countries that have a huge list of banks providing home loans, but until now the high-interest rates have made the situation very challenging for a salaried person looking for a mortgage.


tax on property in Pakistan


Get to know mistakes to avoid when investing in real estate.

 3. The Economy

The economic condition of the country is of utmost importance. If the economy is stable, it will attract investors. As a result, the real estate market will flourish by leaps and bounds. 

If the country has a good GDP, job security, financial stability, and high purchasing power, its people will be able to invest in the real estate market

And here is a fact.

No matter how much you market your real estate projects, people do not want to put in their money in crashing economies. In short, a healthy and stable economy is the foundation of a growing real estate market. 

 4. Government Policies Matters

Friendly governmental policies play a huge role in the growth and development of the real estate sector.

The government may help investors and developers by providing them tax credits, subsidiaries, and deductions. These steps will not only help the country to develop a better infrastructure but it will also help the country to attract foreign investors for commercial or residential investments. 

If the rules and regulations of a country are rigid and strict, the investors and businessmen will shift their businesses to the countries that are cost-effective for them.

 5. Employment Opportunities:

The employment ratio pays a pivotal role in real estate as well.

Did you know that ‘employment to population ratio’ is the proportion of a country’s population that is employed? Pakistan has a score of 77.17%

If the employment ratio is high, it means that people are financially independent and they have high purchasing power. In short, they can afford good housing. 

Due to this trend, the real estate market will bloom as the demand for houses and other buildings will gradually increase. Get to know apartment vs house which one is a better option.


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 6. Trust in the market

“Trust takes years to build, seconds to break, and forever to repair.”

This quote holds true for the real estate market as well.

The image of the country has the utmost importance in the global market. If the builders and developers are sincere to their work and they ensure transparency and trust, then people will automatically invest in the business.

Saving vs investing money is always in heads of people. If there are cases of property frauds, low-quality projects, bad customer service then people will definitely refrain from investing in the Pakistani real estate market people would go for saving options or maybe investing in stocks, etc.

Therefore, real estate personals must maintain a high image of their brands in the eyes of the customers.

 7. External Investors

The ratio of external investors gives direction to the real estate industry for sure. If the country is investor-friendly and welcomes foreign investors then the real estate industry will bloom. 

But how does the relationship between investors and the real estate industry work?

The answer is simple. 

When people invest in your country, they bring in their resources including cash, human capital, machinery, technology, and other equipment. Now, to manage all these things effectively and efficiently, they will be needing space. This is when real estate investment comes into action. 

RE industry provides the investors with factories, storage spaces, offices, showrooms, houses and apartments, and even plot or plot file investments.


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 8. Budget of the Country

The budget defines the cost structures of the properties. If the government decides to increase the price of bricks, cement, fixtures, etc, then the total cost of the house will eventually go up. However, if the country is allocating more budget to the development sector and providing them with subsidiaries and low-cost raw material, the cost of the house will go down.

Also, if the cost of construction in Pakistan will be low, investors will bring in their pool of money in the country because the cost of doing business will become low. 

As a result, not only the business industry will flourish but the people will also enjoy a good life due to more employment opportunities.

So, if you are someone who is about to set foot into the real estate business, you need to look into the real estate market. Follow real estate blogs, real estate podcasts, read books related to real estate, and watch top real estate youtube channels

So, these were some of the latest real estate marketing trends and factors you need to follow in 2020. No doubt, the real estate business in Pakistan is growing at a fast pace and it is easy to predict that the future of real estate business in Pakistan is bright.

Keep an eye on the real estate economic indicators and invest your hard-earned money wisely.

Do you have any additional factors in mind that may drive the Pakistani real estate?

Dropdown your queries and we get back to you as soon as possible.

Happy investing!

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5 thoughts on “Top 8 Factors Affecting the Real Estate Market”

  1. Some of the projects where you can invest are Mall of Arabia, Amazon Outlet Mall, Florence Galleria and Imarat Builders Mall that are starting from as low as 17 Lac. If you are looking for secure investments with guaranteed returns, you should check out these projects here

  2. Marijan Koturic

    very informative & useful article about these factors. I think every real estate agent should read this article about to understand the effect of these factors

  3. Hello,

    Need your kind advice as to where i should invest 5 million rupees in lahore for a 2 year holding period. I am looking for a safe investment with maximum returns.

  4. You made a good point that government policies would also be important to consider when reviewing the real estate market. I’ve been thinking about selling my home through a real estate auction soon. I wonder if this is going to be a sound idea since it might give me a little bit more than its actual market value.

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