Some further estimates on Pakistani real estate: we at @ElphinstoneCap estimate that the total value of residential real estate in Pakistan is ~$725 billion, which is about 2.74x GDP. For context, the US real estate market is ~1.64x US GDP, which implies Pakistani real estate...

... is significantly overvalued, by about 67% (prices would need to come down by ~40% to reach US levels relative to GDP).

Maybe the US is not a fair comparison, but there are other metrics that yield roughly the same amount by which Pakistani real estate is overvalued...

Rental yields in mature sections of the market, for instance, are FAR below the monthly mortgage payment if you financed the house using a mortgage and put a 25% down payment.

Using a basket of some properties, we estimate that, on average, a mortgage payment is about...

... twice as much as the rent that you could get at a 12% mortgage interest rate (the average for the past decade). Now, you might argue that 12% is unfair to use, but we think it is not. It accurately reflects the high levels of inflation in the economy, which, by the way...

... also result in higher price appreciation for real estate. So, based on this methodology, we think it is reasonable to assume that rental yields should approximately equal the cost of financing a property, which implies property prices need to decline by ~50%.

By the way, interest rates make a significant difference to be sure, but it is less than you might think. Taking the interest rate down from 12% to 8% (a 33% reduction in the rate) takes the mortgage payment down by ~24%.

Lower interest rates would not be possible without lower inflation, and lower inflation would reduce the property price appreciation on real estate as well, which may not necessarily be good for the return on investment for real estate (may not be bad either).