How is the genuine buyer affected by property flipping?

Zameen.com

Posted: 13 Jun 2016 

The real estate market is maneuvered by several players, each interested in achieving their own objectives. There is the government that attempts to regulate the market in a bid to keep the sector stable, the developer who attempts to initiate and create unique real estate projects to maximise profit, the agent who is after commissions and big deals, and the property flipper who is always on the lookout for the most lucrative investments to make a few quick bucks. And last, but certainly not the least, is the genuine buyer who painstakingly saves money to buy a residential property to live in. This may very well be the person who has been praying to be free from the torment of monthly rent.
Although the genuine buyer should probably be the most important player in the real estate sector, this is not always the case. The market is, in some ways, more influenced by the property flipper than the genuine buyer. How? Well, the simple rules of demand and supply state that when demand increases, the price also goes up. So, when property flippers show temporary interest in a housing society, the demand accelerates. Consequently, prices shoot up, leaving the genuine buyer who wanted to purchase a plot or home for residential purposes disgruntled and disappointed.
While property flippers are out to make quick profits, which cannot be termed illegal or wrong, what about the genuine buyer who is inevitably influenced by the behaviour and activity of this kind of investor? Suddenly, the ordinary buyer finds himself unable to purchase the property he saved every penny to be able to afford.
Unfortunately, this is not where the damage ends. The vicious cycle spurred by flipping continues. When realty prices hike, these buyers have to resort to rental property. Because real estate is already expensive, home owners charge higher rents. Hence, these potential buyers end up spending a large portion of their monthly income on rent. With savings depleting and property rates increasing, it becomes harder and harder to purchase a residential home or plot. Sometimes, this dream is something many potential buyers have to permanently let go of.
The widow who wants to purchase a plot of land to give her children a secure future cannot afford it now because it is PKR 100,000 more than it previously was. The old man who wanted to buy himself a good apartment has to desperately search for cheaper, uncomfortable options.  The son who worked day and night to give his mother a permanent roof over their heads has to lower his head in defeat.
These are not just excerpts from the lives of different people. These are dreams, hopes, desires, and a lifetime of and work turning to dust, only because real estate has artificially become too expensive.
Is this scenario just the property flipper’s fault? If not, who else is to blame? Is the situation rectifiable? Should it be rectified, even if that leads to less economic growth? It is time for these issues to be scrutinised so that interests of all players – including genuine buyers – are safeguarded.

How is the genuine buyer affected by property flipping? was last modified: June 13th, 2016 by Anam Jalil