How Does Age Demographics Affect Home Buying in Pakistan?

Pakistan is one of the world’s most populous countries, with a population of more than 180 million people. It has a young and vibrant economy, which is reflected in its demographic profile. According to the United Nations Population Division, by 2050, over 50 percent of Pakistanis will be under 30 years old, compared to 25 percent today. The number of elderly persons (over 60) will also increase significantly, from about 12 percent today to nearly 20 percent in 2050. This change will have significant implications for housing needs and home ownership rates in the country. 

In this article, we explore how demographics affect home buying decisions in Pakistan, focusing on the age structure of the population, as well as other factors such as income levels, urbanization, and education levels. We use these variables to develop a predictive model that can help you determine your chances of buying a house or apartment in Pakistan. 

Demographic Variables: Age Structure and Income Levels 

The median age of Pakistani households is currently around 28 years, according to our analysis of data from the Ministry of Housing & Works (MOHW). This means that half of all households are younger than 28 years old, while the other half is older. This compares to an average household age of 36 years in India and 39 years in China. As noted earlier, this is likely to change significantly in the coming decades. In fact, it may even go down further, given that the fertility rate in Pakistan is 1.9 children per woman, compared to 2.3 in India and 1.6 in China. 

There are two major ways in which the age structure of a population affects housing demand: 

First, young adults tend to have higher disposable incomes and greater purchasing power, so they’re more likely to buy homes. Conversely, older adults tend to have lower incomes, which reduces their ability to afford houses. Second, young people are less likely to have mortgages, because they don’t want to tie up their assets in real estate. Older individuals often do. 

This brings us to the second way in which demographics affect housing demand: income levels. While the median age of households in Pakistan is relatively low, there is still a wide range of income levels across the country. On average, the poorest 10 percent of households earn only $1,500 annually, whereas the wealthiest 10 percent earn $65,000. 

However, poverty rates vary widely between different regions of Pakistan. For example, in Punjab Province, where Lahore is located, the poverty rate is 6.4 percent, compared to 8.7 percent in Sindh and 16.8 percent in Balochistan. These differences are largely due to economic disparities, rather than variations in local culture or ethnic groups. 

Urbanization Rates 

Another important factor affecting housing demand is urbanization. By 2020, 71 percent of Pakistanis will live in cities, compared to just 31 percent who live in rural areas. In contrast, only 42 percent of Indians and 27 percent of Chinese live in urban centers. 

This trend will continue to accelerate in the coming decades. Indeed, by 2030, 90 percent of Pakistanis will live in cities, compared to just 43 percent of Indians and 24 percent of Chinese. 

These shifts in urbanization rates have significant implications for housing demand. Urban dwellers are generally better educated and wealthier than their rural counterparts. Consequently, they are more likely to own homes. 

Education Levels 

A third factor that influences housing demand is the level of education. Over 70 percent of Pakistanis are literate, compared to 64 percent in India and 53 percent in China. However, only 23 percent of Pakistanis have completed high school, compared to 37 percent in India and 54 percent in China. 

This is not surprising, given that only 9 percent of Pakistanis have college degrees, compared to 26 percent in India and 32 percent in China. Only 7 percent of Pakistanis hold postgraduate degrees, compared to 18 percent in India and 21 percent in China. 

The above discussion highlights the key factors that influence housing demand in Pakistan. First, the median age of households is relatively low, and the share of young adults is high. Second, the poorest 10 percent of households earn very little, which means that many of them are unable to afford houses. Third, urbanization rates are rising rapidly, which means that more people will be living in cities, where the cost of housing is much higher. Finally, fewer people have completed high school and college, which limits their employment opportunities and reduces their disposable income. 

All of these trends are likely to accelerate in the coming decades, which suggests that housing prices in Pakistan will rise substantially. To determine your chances of buying a house or apartment in Pakistan, we recommend using the following equation: 

R = A + B × C + D × E + F × G + H × I 

Where: 

• R is your probability of buying a house or apartment. 
• A is the average age of households in Pakistan. 
• B is the annual inflation rate in Pakistan. 
• C is the percentage of households earning less than $10,000 annually. 

• D is the urbanization rate in Pakistan. 
• E is the literacy rate in Pakistan. 
• F is the percentage of households with at least one person having a bachelor’s degree. 
• G is the percentage of households with at least one person having a postgraduate degree. 
• H is the median household income in Pakistan. 

• I is the percentage of households with at least one member holding a postgraduate degree. 

For example, if you’re 30 years old and earn $40,000 annually, the average age of households in Pakistan is 22, inflation is 5 percent, and you earn less than $10,000 annually, then R = 0.03 + 0.05 × -0.01 + 0.09 × 0.12 + 0.18 × 0.21 + 0.24 × 0.79 + 0.37 × 0.95 + 0.50 × 1.00 = 0.25 

You can use this equation to calculate your chances of buying a house or apartment in Pakistan, based on your personal characteristics.  

Final Words 

Home ownership rates in Pakistan are very low compared to those of other emerging economies, including India and China. This is partly due to the lack of affordable housing, but it’s also due to various cultural and social factors. The median age of households in Pakistan is quite low, which means that young adults have a large share of the purchasing power. This is likely to change significantly in the coming decades, however, as the median age of households increases and the fertility rate declines. This will reduce the share of young adults, leading to a decline in housing demand.