Dollar Depreciation and Its Effect on Real Estate

US Dollar is the most widely circulated currency in the world. Infact, it is the preferred currency for international purchases worldwide. Middle Eastern countries that sell oil to International customers carry out the transactions in US dollars. In Pakistan, when you are importing a car from Japan, the moment you book a car to the moment it is shipped to Pakistan, all the transactions are done in US Dollars. No other currency is widely used as the US Dollar in international transactions.

We are living in volatile times. Few countries of the world don’t want CPEC to succeed. They don’t want China to gain the status as world superpower, thus they will do everything to disrupt China’s growth. From blocking South China sea route to commanding India to target CPEC within Pakistan, the evil powers won’t rest till their objective is achieved. It’s not just going to end at this, China will respond by trying to devalue the US Dollar. They will start purchasing international items in Chinese Yen instead of Dollars, which will reduce the Dollar value.

When the US dollar starts to loose value, it’ll have a huge impact on the Pakistan real estate market. 20 years ago when the value of 1 Dollar was equal to 60 Rupees, you could easily buy a 10 Marla house for 60 lakhs. Today, with the Dollar rate around 160, you’ll be lucky if you can buy a 10 Marla plot for 60 lakhs. When the rate of Dollar rises, so does Pakistan’s dept. Pakistan’s government survives on loans taken from International lenders like IMF and various banks. The repay is done in US Dollars and not in Pakistan Rupees. Whenever the Dollar rate increases, so does the debt which implies that the government imposes hefty taxes on the people. Applying more taxes increases the plot prices, house prices, house construction price, car prices, petrol price, commodities prices, and everything else. You name it and that item’s price must have tripled within the last 20 yeas.

Since Pakistan does its purchasing in US Dollars, when the Dollar value goes down, the Rupee will have a higher purchasing power. All of a sudden, you will notice prices of all things will start to go down. The government will be able to repay the loan in little bit few dollars thus the public will be relieved from some taxes. As more value of the dollar goes down, more taxes will be exempted, providing relief to the people. Automatically, prices of items will go down and plot prices will become more affordable. Construction and labour prices will go down making housing affodable for the people. Let’s pray that the dollar value goes down soon so that we can enjoy the benefits.

Dollar Depreciation and Its Effect on Real Estate

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