KATHMANDU, Jan 16: The real estate transaction has started to increase after Nepal Rastra Bank (NRB) adopted lenient policy along with a fall in interest rate on property loans issued by banks.
The records with the Department of Land Management and Archive (DoLMA) show that a total of 45,277 units of land plots and housing were transacted in the past one month. The number of transactions was the highest amongst the transactions carried out in the first five months of the current fiscal year. The government collected revenue worth over Rs 3.20 billion from the property transaction during mid-December and mid-January.
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In the past few months, banks have reduced their base lending rate after they started having an excessive amount of loanable funds with them. In addition, the NRB’s decision to adopt a lenient policy for the sector has also helped improve the property transactions in recent days.
While unveiling its first quarterly review of the monetary policy on December 8, the NRB increased the threshold of loans on property from Rs 15 million to Rs 20 million. Similarly, the central bank has also reduced the weighted risk on real estate lending while it has raised the monthly installment to income ratio to 60 percent.
Since last year, Nepal has been facing an economic slowdown, which is mainly blamed on a sharp decline in real estate transactions. Following the pressure from the private sector, Finance Minister Prakash Sharan Mahat also pressurized the NRB to be flexible to the real estate sector.
Property developers however expressed their dissatisfaction towards the increase in transaction of real estate, despite the NRB’s flexible policy. “There was a nominal growth in the transaction, as the NRB addressed only the issues of small investors ignoring largely the big investors,” said Bhesh Raj Lohani, president of Nepal Land and Housing Developers’ Federation.
According to the DoLMA, there were 41,851 units of real estate transactions carried out during mid-November and mid-December. The government collected revenue of Rs 2.86 billion. In mid-October to mid-November, 26,046 real estate transactions were done. Accordingly, the revenue of Rs 2.16 billion was accumulated in the account of the government.
