Posted by: pire May 22, 2010
घरजग्गा अब कती माथि ?
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Riten, I guess 12% interest rate is high amount anyway we slice it! I also think inflation in our country is an artificially created thing; our government is irresponsible to this issue. If they want to control, all they have to do is facilitate china-business.

Sid, what you said is partially right. But what you said merely explains that price must rise in Kathmandu, but it doesn't explain why it must rise by 20 times. Sure, to buy a house in KTM is a dream for a lot of people. But it is more of a dream of people who are regular jagire in KTM and had to live under the ornery houseowners. Lots of rich people outside KTM don't bother to buy the house in KTM, or if they buy, they buy the house with commercial possibility so that the house can be rented. A neighbor of mine(from outside of KTM) , who owns a house in KTM but is planning to sell because raising rent from tenants has become an exercise of its own, tells me that he would rather just put money in the bank and live off the interest. Even govt treasury offers 9% interest in Nepal now.

I also want you to note that since the price hasn't increased in the last seven months (it is from the reports in ekantipur, nagarik)- if a house worth 2 karod seven months ago is still worth 2 karod now, it is actually worth 1 karod 86 lakh (plus what ever rent, most likely 2 lakh or less) if you factor in 12% interest rate.

Also, it reminded me the property bubble in Dubai. I knew a famous Nepali who put several million dollars there, and told me that the prices won't fall. He had same arguments: how Dubai is the center of arabian world, the most liberal place, dream of all south asian merchants, with limited land et cetera. Well, the price has fallen by 60% now. And he himself tells me that it is getting harder to get even some  decent tenants.

I think  there is simply not much profit out there in KTM real estate to move in rightnow. But that is my opinion-- I would rather just rent the whole house for 25K per month rather than buy it for 2 karod, and see how the price evolves over time. I obviously have been keen to sell my land for the promised price of last year.
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The key questions of interest are: why this sudden discontinuous jump? Sure, Maoist problem was rising since 1995 or so, people began going abroad in large mass since early 90s, but why now? After the Maoist problem has actually ended and all fires in Madhes seems to be less than in previous years? Why jump , rather than a continuous increase? How would the market correct it?
Last edited: 22-May-10 11:50 AM
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