As you all know that country is facing an economic crisis nowadays. Prices are increasing day by day. Hikes in prices are affecting all the fields of life. Overall the economy is in a depression state. All the economic activities are going through a dramatic downturn which results in a sharp fall in growth, employment, and production. Generally when prices increase it is called inflation. As it affects the economy, it also has an effect on real estate. Let us discuss, how inflation affects real estate. There are some impacts of inflation on real estate that are discussed below
What Is Inflation?
Inflation is when the overall prices increase and the purchasing value of money falls. As inflation rises, the money starts losing value which affects your spending ability.
Impact Of Inflation On Real Estate
Inflation has a positive as well as negative impact on Real Estate
Rising Inflation does not affect investors, they are the only one which gains benefits from inflationary conditions
Increase in Property Valuation
When we take a look at the property data, an enormous appreciation of the value of the properties is observed. However, you should have to be sharp-witted while investing in the property. You should invest in a property that will give a high return on your investment. If you want to invest in the properties that will give you a high return on investment in the long run in DHA Islamabad and Bahria Town Islamabad. Contact Awan Properties
Increase in Rents
As inflation increases, rental prices increase. Property owners gains benefit by increasing rental prices for their properties.
There are also some negative impacts of inflation on real estate
Cost of Construction Increases
As inflation increases the cost of construction materials will also increase like bricks, cement, steel, etc.
Increase in the Cost of Borrowing
With the rising inflation, central banks tend to increase the interest rate This impact negatively to the purchaser who is looking to finance their real estate purchase as the cost of borrowing increases.
Inflation has positive as well as negative impacts on the real estate industry in the form of increases in property valuation and increases in rents as well as the cost of construction and costs borrowing increases