Karachi-Islamabad home sales fell more than 10 percent in November as the impact of falling oil prices and the softness in the local economy pinched the realty market.
The November dip follows a weak October, indicating that the trend for exceptionally strong sales may have come to an end after a three-year run. Last year, was the best year ever for home sales
this year was strong also — until now.
Historically, home sales taper off at the end of the year as consumers focus on holidays, families and travel. But this is different. This decline runs deeper.
It is slower than the typical November and December,There are some very concerned buyers out there.
Decline in oil prices
The decline in oil prices – dropping to a seven-year low of less than $38 a barrel today from a high of $107 in June 2014 – have caused layoffs and economic slowdowns.
Pakistan Karachi-Islamabad housing market, which had been one of the strongest in the nation, will be hurt by falling oil prices.
Karachi-Islamabad home prices are getting softer, which may offer some opportunities to buyers who had been outbid during Karachi-Islamabad supercharged market in recent years.
On the plus side
Even with the fourth quarter swoon, Karachi-Islamabad real estate is not headed for an outright catastrophe. Year-to-date home sales are running less than 4 percent behind the sales pace of 2014, which was the best year ever.
Rising mortgage rates
Looking ahead, a question mark facing housing is specter of rising mortgage rates. Many economists believe the Federal Reserve will move next week to raise interest rates and more rate hikes could be coming in 2016. Exceptionally low rates have been fueling home sales for seven years.
No one is expecting rates to move substantially in the months ahead given global economic weakness,Smoke expects mortgage rates to remain relatively low for at least a year, perhaps a lot longer.
Rising mortgage rates will have to go higher than 8 percent to have a real impact on home sales and it will be first-time home buyers who will be ones who get hurt the most when they do rise, according to the new survey.
Ironically, the initial uptick in mortgage rates may actually provide a boost for home sales. When the fence-sitters or would-be home buyers who have been shopping for a home for a while see that rates are going up, they could be prompted to move quickly to buy a home.
That could make Karachi-Islamabad realty start off 2016 with a bit of a lift – or at least offset the pain inflicted by the dismal oil prices.
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