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Nepal Real Estate Sector: Why is Buying and Selling Declining?

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The real estate sector has recently been on the decline. In the first two months of the current fiscal year, It picks up momentum (July-September). Since then, it has slowed down. Despite the COVID-19, the real estate industry achieved a new high last year (many so far). Even though, it traded at the same pace in the first two months of this fiscal year; it has been dropping since September.

Real estate professionals, say that the recent lack of liquidity in the banking system has also affected the real estate sector. The buying and selling of real estate has also decreased due to lack of liquidity and easy access to loans.

Bipin Chitrakar, a member of the Federation of Nepal Land and Housing Association, said, “In the past, people used to buy real estate with a loan from a bank even if they had half the money.” However, at present, except for having money, one cannot afford to buy a house or land. That is why the business has suddenly declined.

The reason behind the declining trend in the real estate business is due to the investment of people’s money in the different business avenues. At the same time, the businessmen also say that the business has decreased due to the tightening of plotting by the government.

Downward Trend Of Real Estate Industry

According to the “Nepal Land & Housing Developers Association (NLHDA)”, the real estate sector was on rising in July and August of the current fiscal year. However, it decreases in September and October of the current fiscal year. A total of 190,079 real estate transactions are made in July / August of the current fiscal year. But, it has come down to 168,609 by mid-November. The real estate sector has declined by 22,000 in October compared to the same month last year. Similarly, 75 thousand 417 houses and lands were bought and sold in July. Whereas, 59 thousand 227 houses were bought and sold in October.

Nepal real estate trend 2078

According to the association, most of the real estate transactions have been done in August. A total of 236,000 real estate transactions have taken place this month. Of these, 70 thousand transactions have been made, 4763 have been transferred, 66 thousand 558 have been blocked, and 36 thousand 823 transactions have been canceled.

Similarly, a total of 168,000 real estate transactions have taken place in September. Of them, 59,227 have been bought and sold, 3,988 have been transferred, 57,618 transactions have been blocked and 29,880 have been sold.

Revenue on Decline

Along with the decline in the real estate business, there has also been a decline in revenue. Revenue collection has decreased by Rs. 1.84 billion in Kartik compared to July / July of the current fiscal year.

A total of Rs 7.33 billion was collected through real estate transactions in August. But it declined to Rs 5.49 billion in November. In August, Rs 390 million was collected from service tax, Rs 4.70 billion from registration fee, and Rs 2.4 billion from capital gains tax. According to the department, service tax was Rs 280 million, the registration fee was Rs 3.22 billion, and the capital gains tax was Rs 1.3 billion in November.

According to the department, total revenue of Rs 8.26 billion has been collected in August. Of this, Rs 499.2 million has been collected for service tax. Amount of Rs 4.70 billion for registration fee and Rs 2.7 billion for capital gains tax.

Similarly, total revenue of Rs 7.33 billion has been collected from Asoj including service tax of Rs 405.5 million. A registration fee of Rs 4.23 billion and a capital gains tax of Rs 1.78 billion have been collected. A total of Rs 29.21 billion has been collected from real estate transactions in the first four months of the current fiscal year.

Continue reading more about Nepal’s real estate market:

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