Transactions of land and housing in the Kathmandu Valley recorded a straight away drop of 3 percent in the sixth month -- when the new provision came into effect -- compared to a month ago, shows statistics of Department of Land Reforms and Management (DoLRM). [break]
“Transactions mainly dropped in the city core, where the prices of land have hit roof and deals are almost impossible without banks loans,” Tulasi Ram Vaidya, a DoLRM official, said.
As a result, revenue collection of Dillibazar Land Tax Office (LTO), which was recording double digit growth till fifth month, plummeted by about 5 percent to Rs 164.3 million in the sixth month.
Officials at all five LTOs in the Valley said the crowds of people at their offices have gone down these days, compared to the past. “During our inspection, a number of brokers even complained of a large number of people approaching them for the deal of withholding their procurement decision,” he stated.
Land and housing developers, who convened a national assembly in the capital a couple of weeks ago, too had raised concerns over clients pulling out of almost-sealed housing deals.
“Some banks and a large number of development banks and finance companies are presently turning down loans applications,” Ichchha Bahadur Wagle of Nepal Land and Housing Developers´ Association (NLHDA) told myrepublica.com.
While that was already enough to deter the clients, hike in lending rates in the wake of liquidity crunch and enforcement of penal rate by the central bank have further driven away the buyers.
Keeping in view the impact the central bank´s decision had in the market, NLHDA has already appealed the government to revise the capping decision.
Market shows sign of cooling
Transactions of land and housing have nosedived in the Valley over the first six months, indicating that the overheated realty market has started to show signs of cooling.
DoLRM records show that transactions in terms of revenue collection dropped by just about a percent during the first half of 2009/10, compared to the same period last year. But given that LTOs had jacked up the valuation of land in an average of 25 percent in mid-July 2009, the transactions have actually dropped by more than 26 percent, said Raju Basnet, another DoLRM official.
Land and housing transactions contributed Rs 1.97 billion in revenue during the period this year.
LTOs data further show that transactions of late have dropped mainly in the west and south-western parts of the Valley. Transactions at Kalanki LTO that registers deals of these areas have dropped by as much as 40 percent, said an official there.
Bhaktapur, which in the past attracted a large number of migrant buyers from outside the Valley, too recorded a drop in transactions by as much as one-third over what was recorded in the same period last year.
Dillibazar LTO was the only land tax office in the Valley that recorded growth in revenue collection during the first half of 2009/10. However, even its collection rate failed to match with the extent by which it revalued the reference prices of the property.
Apart from cap and higher lending rates, officials attributed the decline also to factors like tighter lending policy of the banks and financial institutions, overheating of market that pushed prices beyond commoners´ reach and also the shift in people´s priority to buy land outside the Valley.
milan@myrepublica.com
Related story
Lending slows as banks focus on recovery of loans at fiscal yea...
