Will The Price of Land Decrease in Nepal After Corona Virus Pandemic?

Tue, May 19, 2020 12:46 PM on Economy, Exclusive, Latest,
Will The P...

In addition to having a well-paid job and after getting married, a person is considered of being successful in life only after owning a home in Nepalese society. A house can either be directly bought or built after purchasing land. But a considerable number of lower-middle-class people are living in rent in city areas like Kathmandu for purpose of job or business. The price of homes in the international housing market is estimated to drop by 20% due to the Corona Virus effect as per international media. Will it be the same in our context too?  When will the dream of Nepalese people of possessing a home in a city area be fulfilled? The recent outbreak of the Corona Virus Pandemic has introduced a serious question that is difficult to answer.

For Apartments and Collective Residential Tall Building: High chance of low demand

The nature of coronavirus is highly catchy and infectious. The concept of socio-physical distancing has emerged of nowhere because of this virus. People living in apartments have to constantly share publicly available services (like an elevator, gym, swimming pool, etc) where seems to increase the chance of infection.  Hundreds of people living in a single building multiply the probability of the spread of contagious disease. Thus, the collective housing tall residential buildings whose demand was badly affected by the earthquake of 2072 may again be on the risk of suffering from low demand as people may dislike living in an apartment building. Though services for comfortable living are well available in such units, it can be simply estimated that people may rather love to own a home if the coronavirus pandemic continues for a long period of time; for fear of contagious disease in the future too.

No renting but owning

Before the corona pandemic, the sharing economy was getting much popular across the world. “Why to buy if you can rent?” concept was being widespread. Now, with the appearance of the Corona Virus, there is a high chance that people may again go back to owning rather than renting. It can be predicted that there may be high demand for small homes in City areas and also for land in all emerging towns across the nation from the people currently renting rooms. This may unnecessarily hike the price of land and homes which has already been unaffordable. This would only add pain in the way of people towards getting a life-time-dream-house. So, people living in rented rooms may have to wait and work for more years just to buy a home.

As People from abroad return back: demand for land may rise in emerging towns

The considerable number of brothers and sisters working abroad in foreign countries are ready to come back to Nepal due to the loss of jobs as a result of the Corona Virus. As much as 6 lakhs people are waiting pandemic to end to return back to Nepal as per Nepalese Media. Such people will want to migrate from villages to those areas where they can start a business or a profession and in areas with good access to education for their children and health facilities. There may emerge a rapid increment in demand for land and home in emerging town areas which would hike up the price of land and home.

The demand for agricultural land may also increase. As youths who returned from abroad may want to consider themselves being engaged in agricultural activities, this may raise price of agricultural land too.

Things to be done

The urbanization pattern in Nepal till now is unplanned and unregulated. Our urban area, emerging cities, and towns are not the result of the government’s proper vision and planning but end result of 'so-called land middlemen' and other persons involved in the plotting of agricultural land. Now it is necessary to check the past trend of unplanned urbanization although it has already been late.

As there are local governments, they should ensure proper plans for differentiating agricultural land and residential land and launch housing policy at all local levels. They should strictly implement schemes to encourage people to live in their own village and discourage migration to city areas. This can only be done by providing people with incentives to live in the village and requires the establishment of infrastructures like better schools and colleges, well-managed health facilities in rural areas, and easy access to the market for selling products manufactured/produced in such areas.  

In addition to this, since buying land and building a home now has become too expensive, one generally cannot do it so without obtaining a loan from banks.  There seems likely of increment in demand for housing loans after the Pandemic ends which is further supported by interest rate cuts.  Also, funds from the co-operative sector which is loosely regulated may be on the risk of being channelized for speculation in land for short term better gain after the Corona Virus Pandemic.

If it goes unchecked by the concerned monetary authority, there lies a danger ahead that once again there will be national-level speculation in the price of land that happened earlier before some years ago (after 2062/63 movement). Hence, proper regulation and coordination mechanisms among concerned authorities should be developed at earliest to monitor the housing sector before general people suffer from pains of housing market bubble which may arise if the sector remains unregulated after the Corona Virus Pandemic.

SANJAY GELAL, Biratnagar, Nepal