Buying Property In Down Market – What Are the Pros and Cons?
Overview
Before jumping onto the pros and cons of property investment in a down market, it is important to understand what a down market means. Down Market is when rates in the real estate market are falling or the investment market is sluggish.
The buying rates in the market may also be low during the tenure of a down market which increases the desire for buying a property in the down market. The Pakistani real estate market is also going through a rough patch because of rising inflation and a soaring economy.
At the same time, the country is going through the worst ever political turmoil. Real estate experts refer to this time as a down market for the real estate sector in Pakistan. But there are always two sides to a picture, and it is important to understand the pros and cons of buying any property at this time.
Pros
You can Buy Bigger Properties for Less Money
If you are financially stable in the country’s current crisis, it is the right time to switch to a bigger location. Even if you are looking to buy a piece of land for future returns on investment, you will get a significantly large piece of land for less money.
It is a very common concept in a down market that you get more for your money in an otherwise stable economy. If you are looking forward to moving into a bigger house, you can also do that in a down market with little differential to pay.
Future Looks Promising
It has been observed in the past that the real estate market sees a boom when the buying power of the middle-class of the country increases. Therefore, one can hope to see a similar trend in the income patterns of the middle-class in Pakistan. The middle class is interested in small investments as soon as they have increased income support.
This creates a demand in the market and the prices increase as a result. This is the most basic concept of economics that demand increases prices. So, if you buy in a down market like that of Pakistan, you can see increased prices in the future.
Easy Financing
In a down market, bank financing is easy, making it more attractive to buy property at this time. In Pakistan, home finance loans are easier in these types of situations as the banks are trying to attract more investors. It is the best time to invest in the real estate market of Pakistan right now as the banks are providing home loans at good terms.
Cons
Long Wait before Returns on Investment
Buying a property in this down market is a great option if you are willing to wait for a longer period. Especially in Pakistan, the political and economic crisis is nowhere near being resolved. At the same time, inflation is at an all-time high.
This means that the country is not only going to take longer to get back to normal, but the income patterns are also going to be similar in the immediate future. It is going to be a long haul before any investment would bring in good profits.
Hence, a disadvantage of investing in a property in a down market is the long wait before getting good returns.
Volatile Market
If the real estate market is down at the moment, there is no guarantee for it being successful in the short future. It is a volatile market and it is dependent on the income of the people in the country.
These unusual circumstances make it difficult for investors to find a viable option for investment. There is no guarantee for returns on investment in any real estate market. It is important to research a market before making any substantial investment in the property.
Requires Your Time
It is a full-time job to stay updated with the market trends for maximum profit out of your property. Moreover, you should be vigilant to make the right choice while buying a property in a down market.
Summing Up!
It is also very significant to hire an agency that can replace all your efforts in looking at the properties. Professional advice will help you maneuver through a down market and will get the best deal for you. There are great professional real estate agents that you can hire to help you deal with this disadvantage.
So, these were the pros and cons of property investment in a down-market. Liked what you read? There is plenty of more useful and informing content in our property blog, be sure to check it out.
Get expert advice from Manahil Estate before investing. We would guide you through the whole buying process and ensure profitability on investments. Contact us for details at 0345-5222253
