The global financial crisis of 2008 was triggered by a collapse of the US real estate market, which had been experiencing a period of rapid growth and speculation. The market bubble eventually burst, causing a domino effect that resulted in a widespread economic crisis that had a lasting impact on the world economy. There are many similarities between the US real estate market in 2008 and the current state of the real estate market in Pakistan.
One of the key similarities between the two markets is the existence of a housing bubble. In both cases, the rapid growth of the real estate market has led to an artificial increase in property prices, which has made it difficult for many people to afford their own homes. In Pakistan, property prices have increased by an average of 35% in the past five years, making it one of the fastest-growing real estate markets in the world.
Another similarity between the two markets is the role of speculative investment. In both cases, investors have been buying property with the expectation that its value will continue to rise, rather than because of genuine demand for housing. In Pakistan, for example, many investors have been buying up plots of land with the expectation that they will be able to sell them at a profit in the future.
The role of easy credit is also a factor in both markets. In the US, subprime mortgages were a key factor in the growth of the real estate market, as they made it possible for people with low credit scores to buy homes. In Pakistan, banks have been providing easy credit to investors, making it easier for them to buy up large amounts of property.
One of the major differences between the two markets is the role of the government. In the US, the government had a hands-off approach to the real estate market, and did not intervene until the crisis had already begun. In Pakistan, however, the government has actively encouraged the growth of the real estate market, providing tax breaks and subsidies to developers and investors.
While there are certainly some differences between the US real estate crisis of 2008 and the current state of the real estate market in Pakistan, there are also many similarities. The growth of the market has been driven by speculation, easy credit, and an artificial increase in property prices, which are all factors that contributed to the US crisis. It is important that the government takes steps to ensure that the real estate market in Pakistan grows sustainably, to avoid a similar crisis. Investors should also exercise caution and avoid investing in real estate purely for speculative purposes.