The inflation has caused surge in house prices

The worldwide inflation has caused surge in house prices across the globe. Pakistan is no exception in this case. Not only that, being an inflationary economy, prices have skyrocketed across the board. The largest increase in house prices has been caused by the prices of materials. The main materials such as cement, sand, crush and gavel have seen higher incremental costs.

Take an example of cement prices. There are more than 10 cement manufacturing companies, which are listed on stock exchange. Competition is very stiff. Despite that, the cost of per bag has increased from Rs. 550 to Rs. 750. In some cities, black market is thriving and cement bags are being sold in black market by creating an artificial shortage of cement. Prices in such areas have touched Rs. 1000.

House builders are helpless and some are complaining about the recent hike in prices. The incremental cost is being passed on to home buyers, who are already facing stagnated wages. As wages have not increased in line with inflation, people are suffering from dissaving.
Other items such as sand, crush and gravel have also seen surge in their base cost. Home builders are compelled to use cheaper sand and crush. This affects the quality of cement mixture, which in turn affects the quality of construction.

Government is blaming worldwide inflation such as rising petrol prices as the root cause of this. Most of the time, economies face cost push inflation and Pakistan is also facing the same. On the other hand, Iran has seen devastating industries despite being an oil producing country. More and more currency is being printed and pushed into the economy.

Also, in such a country where government is responsible for house construction, employees of various construction companies are facing redundancies. The inflation has caused a vicious cycle

across all sectors of the economy.