What will housing investments look like in 2022?

2021 ends with rising inflation and a real estate sector that has already recovered, even exceeding pre-pandemic levels. What are the prospects for investment in housing in 2022?

In our previous note The Housing Law promotes investment in hotels and offices, we have addressed the issue of forecasts in the housing market in 2022.

The low interest rates of the mortgages of various banks, added to the opening of borders and the arrival of foreign investors have created a more than favorable future for the Pakistani real estate market. In this article brought to you by mtmis , the team will help you with figuring out housing investments.

Rise in house prices in 2022

According to the INE, since May of this year transactions in the sale of housing have begun to increase. Of course, this data is directly related to the reduction in coronavirus cases, mass vaccination and the opening of borders.

The upward trend, although moderate, is very favorable and experts are pointing to this moment as the ideal time to invest in housing. The price of real estate will rise 6% next year, according to experts, after a year with widespread increases, even going through COVID-19.

The moderation in the forecasts is due to the continuing uncertainty and changes in the financial sector. This causes investors to continue to be cautious but go the brick anyway.

Very active demand for housing in 2022

The demand for properties has increased for two main reasons. On the one hand, many operations that had been paralyzed by the pandemic were completed in recent months.

On the other hand, families' ability to save has been increased due to compulsory isolation and the inevitable consequence of reducing spending on leisure, travel, etc.

Let us also not forget that the presence of foreigners reactivates the purchase of houses and that this external investment will depend, next year, mainly on the evolution of infections and outbreaks. Foreign investment is generally concentrated in areas that depend on tourism, such as Levante.

How is housing planned then in 2022?

Household income is increasing, however, the evolution of inflation that poses questions to the market must be taken into account. For its part, unemployment has fallen for 8 months, which generates optimism for next year.

Although new construction depends on the price of materials, which tend to rise, second-hand housing is different since it will not exceed 2% and an increasingly polarized trend in the housing market is in sight.

Mortgages that encourage investments

The current conditions to access a mortgage today are very favorable, both for variable rate and fixed rate credit. We must bear in mind that the prices of new-build homes became more expensive than second-hand ones: 6% more than in 2020.

The Euribor has been negative since 2016, this means that banks do not pay commissions for leaving money between them, which allows obtaining really competitive mortgages.

"In the third quarter the recovery of the activity in individuals is consolidated, highlighting the new production in home mortgages where we once again reach new maximums of monthly production of the last 3 years", they affirm from Banco Santander in its latest financial report.

What will happen to rental prices?

The current profitability of a rental is around 3.7%, although it is difficult to calculate. Investing in rental housing continues to be a refuge value for many Pakistanis. Islamabad and Lahore are still the most profitable areas to rent, also Karachi and Peshawar.

Add to this the new penalties in the Housing Law, which encourages the sale of disused flats and will reduce the number of rental properties, the team of nova islamabad makes sure to follow all the specific guidelines. This will have consequences in the 2022 figures surely.

Demand for garages is on the rise

The demand for private transport has increased with the pandemic, in order to avoid crowds in public transport. It is mainly for this reason that the demand for places to park the car has increased and the profitability of the garages is being very interesting.

The gross profitability of the garages is reaching between 3% and 6%, depending on the area in which it is located.

Horizons for investing in housing in 2022

This year it will end with 550,000 home sales, which shows a more than healthy market despite the crisis it had to go through.

The current trend of people seeking housing in 2022 is focusing on the big cities again. By resuming work in the offices, people have stopped looking for remote areas of the city and resume the natural trends that always occurred in the national real estate market.

On the other hand, the sustainability objective imposed by the Pakistani Commission will lead to investing in many housing renovations to adapt the buildings to environmental requirements.

Is there a possibility of a housing bubble?

They are talking about a possible real estate bubble next year but the truth is that there is no conclusive data that leads to think about that possibility. Property sales these months and the moderate rise in prices do not lead to a risky uptrend.

The rebound in operations is related to the return after several months of having a sector completely stopped, as a result of the coronavirus. The reopening is leading to a small peak that is consistent with thousands of operations that had been on standby due to an emergency situation worldwide that we all know.

Of course: the type of properties that people are looking for has totally varied. Now wide, spacious properties are in demand, with terraces or balconies and a lot of air circulation. What people also contemplate and value when investing in housing is the possibility of setting up a teleworking space in case the situation requires it. For more details and information, do not hesitate to contact us at taj residencia .