Despite the central bank´s promise to ease loans for housing, realty market in the Kathmandu Valley continued to cast dismal look in the new fiscal year as well, thanks to deepening confusion among consumers.

Transactions dipped by about 31 percent in the first month of the current fiscal year, ending mid-August, compared to the last month of 2009/10 that ended on mid-July, according to Department of Land Revenue and Management (DoLRM).

“The decline in transactions made direct impact on our revenue collections,” said Tulasi Ram Vaidya, an official at the department, disclosing to myrepublica.com that the five land revenue offices (LROs) of the Valley collected mere Rs 124.5 million during the month. The cumulative collections of those LROs had totaled to Rs 179.5 million in mid-July, 2010.

Statistics of the department also shows that the volume of transactions in the Valley during the month totaled mere to equal a quarter of transactions recorded in December, 2009, when Nepal Rastra Bank imposed cap on realty loans exposure to the banks and financial institutions, aiming to cool down the overheated realty market.

“The step that forced banks and financial institutions to tighten their loans has continued to have its impact. People are shying away from making new purchases, anticipating prices to fall,” Vaidya said.

The central bank had intervened in the market, mainly as prices soared unnaturally over the last three years on the back of easy finances. Deteriorating law and order situation in Tarai and other parts of the country, which spurred rapid transfer of assets to Kathmandu, too had fueled the prices.

Since the NRB intervention, volume of transactions in the city center as well as other parts of Kathmandu district has shrunk to one-third of what was recorded in January, 2010, shows DoLRM records.

Compared to January 2010, monthly transactions of land and housing in Lalitpur and Bhaktapur districts dropped by more than 75 percent and 60 percent respectively.

Though the central bank in the monetary policy for the new fiscal year announced that it will ease access to credit for organized housing business, officials said its impact will take at least a few months to surface because people generally refrain from making new purchases during monsoon.

New purchases gather momentum only on arrival of festive seasons in October.

Officials of Nepal Land and Housing Developer´s Association, meanwhile, preferred not to comment on present business slump. Apart from the seasonal impact, they said the association was waiting for the central bank to unveil new lending directives as promised in the monetary policy to reassess their position.

source: republica (2010),"Realty market casts gloomy look  ",republica, 26 August 2010