Living the retirement plan as a real-estate owner seems unattainable in today’s Pakistan. And not buying coffee on the way to work won’t make a difference.

Having worked (and saved) from an early age, commencing with an esteemed magazine during adolescence, followed by part-time employment while pursuing higher education, and working full-time with a lucrative take-home, it is a small wonder that one can manage one’s own bills. However, I am currently three years older than my parents were when they purchased their house in 1995.

Earning an average monthly income as a writer, which is approximately doubly higher than the median monthly most professionals make, purchasing property now appears more unachievable than it was only five years before. This translates into the fact that Pakistan’s cost-of-living crisis has a greater impact on younger generations now entering the workforce.

This cost-of-living crisis has persisted more strongly since 2022, characterised by a decline in disposable incomes due to increased national and global inflation, the ongoing effects of the Covid-19 pandemic, the repercussions of political uncertainty, and the conflict in Ukraine.

Saving for a down payment, even with modest daily expenses, has become a formidable task given the persistent economic challenges

Although the impact is felt across the board, young individuals, who typically have lower incomes and fewer savings, are among those most severely affected. The idea of the younger generation, belonging to the middle class, envisioning a tangible future that includes homeownership, a decent car, a comfortable lifestyle, and the thought of retiring before the age of 60 remains an insurmountable challenge.

While the elders acknowledge that their journey was far from effortless, they have recognised that they wouldn’t have the same level of financial security or the opportunity to enter the real estate market in the present climate. Their years of diligent effort have paid off in rewards that the coming generation’s exertions do not appear to match.

According to expatistan.com, a family of four estimated monthly costs at Rs415,176, while a single person estimated monthly costs at Rs84,855. The per capita income in dollar terms fell to $1,568 in FY23 from $1,766 in the previous year and $1,677 in FY21.

This suggests the deterioration of the standard of living and future financial well-being of almost all segments of society with a sharp decrease in disposable income, limiting individuals’ ability to afford goods and services, save, or invest.

According to Pakistan’s largest property portal Zameen.com, the average price of a house in September 2023 was Rs40.34 million. This price increased by Rs20.91m, approximately 203 per cent since December 2010.

This goes on to show that residential properties are becoming more costly at a rapid pace than the Consumer Price Index (CPI), which increased to 29.4pc on a year-on-year basis in June 2023 compared to 21.3pc in June 2022.

One could argue that ceasing social activities to increase savings is an option, but it is unrealistic to anticipate that all young individuals will halt their social lives for the sake of saving. The financial challenges young individuals face stem not from occasional indulgences like grabbing a latte on their way to work or a movie/theatre night on weekends. Rather, these struggles are primarily due to the increasingly arduous path to establishing oneself as an adult in today’s world.

With property prices outpacing income growth and the soaring cost of real estate, the initial step onto the property ladder seems increasingly out of reach for them. Saving for a down payment, even with modest daily expenses, has also become a formidable task, given the persistent economic challenges that continue to test the resolve of individuals aspiring to buy their first home.

Acquiring a foothold on the real estate market and preparing for the future has become increasingly challenging, regardless of whether one indulges in occasional small treats or not.

While some may argue that these seemingly unnecessary cuts could expedite the journey towards homeownership, it is essential to recognise that the overarching financial landscape has fundamentally shifted.

Stagnant wages and the rising cost of living have converged to make the pursuit of long-term financial security an increasingly uphill battle. The struggle to plan for the future extends beyond the purchase of a house; it encompasses the quest for economic stability, retirement savings, and a quality of life that is not entirely dependent on financial sacrifices.

The challenge is emblematic of the broader economic disparities and structural changes that have reshaped the modern financial landscape, presenting young people with a multifaceted financial puzzle that is difficult to solve through mere frugality.

The writer is the Head of Content at a communications agency.
sara.amj@hotmail.co.uk

Published in Dawn, The Business and Finance Weekly, October 23rd, 2023