Why Is Real Estate A Good Investment During Inflation?
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Loading... - Omala Shah
- 04 May 2023
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Inflation refers to an increase in the general prices of goods and services over a period of time. If one has some money saved up in an account over the years, the purchasing power of the money will reduce due to yearly inflation.
Hence, investing is always a better option, and one of the safest and low-risk investments is in real estate. An ideal rate of inflation through international standards is 2%, but Pakistan is facing the highest inflation rate of all time which is 31%.
From the perspective of real estate, the inflation rate can impact the price of properties in a range of ways, such as increased cost of borrowing, high cost of developing, increased rental property rates etc. Inflation’s pros and cons impact the real estate sector, yet it is a good investment during inflation.
Graana.com, in collaboration with the Iqbal Institute of Policy Studies, explores why real estate is a better investment opportunity.
Why is Real Estate a Good Investment during Inflation?
Real Estate as a Hedge Against Inflation
Many investors buy assets such as real estate or gold as a hedge against inflation. Property prices respond proportionally to inflation which often increases the value of the property as inflation rises.
Other investments like stocks and bonds usually react negatively to rising inflation. Responsible banks encourage some per cent of yearly inflation to achieve price stability; however, with very high inflation rates, different investments react differently.
Investing in real estate during inflation is wise as the prices mostly go up and the property value appreciates. Compared to other viable ways of investing, buying a property may be more useful and worthy in future. Read More…
