Kathmandu- Nepal’s real estate market is stuck. Banks are offloading billions worth of distressed properties, slashing prices in a bid to clear bad loans. Interest rates are low, and there’s plenty of money in the banking system.
But buyers? They’re still waiting—betting that prices will drop even further. With transactions slowing and government revenue shrinking, the big question is: how low will the market go before investors jump back in?
After showing some improvement in Poush, property transactions dipped again in Magh (mid-January to mid-February), signaling continued uncertainty in the sector.
According to the Department of Land Management and Archives, only 46,069 real estate deeds were processed nationwide in Magh, down from 48,156 in (mid-December to mid-January). This slowdown comes despite banks sitting on nearly Rs 700 billion in deposits and offering low-interest loans. Investors, however, remain hesitant, waiting for property prices to drop further before making a move.
Why are transactions slowing down?The key issue is non-performing loans (NPLs). With bad debt piling up, banks are offloading Rs 39 billion worth of non-banking assets, including real estate, often at a loss. This distressed selling is expected to push property prices even lower in the coming months, making potential buyers more cautious.
The impact on government revenueFewer transactions mean less revenue for the government. In Magh, the state collected Rs 3.87 billion from property deals, down from Rs 4.25 billion in Poush. A year ago, in Magh, 50,921 transactions were recorded—significantly higher than this year’s numbers.
The downward trend has been ongoing for months. In Mangsir (mid-November to mid-December), real estate revenue stood at Rs 3.87 billion, while in Kartik (mid-October to mid-November), it was even lower at Rs 2.7 billion. Only 33,514 transactions were recorded in Kartik, and the market had already been declining since Asoj. (mid-September to mid-October)
What’s next?
With banks desperate to clear bad loans and the government facing a revenue squeeze, the real estate sector is at a crossroads. If distressed sales accelerate, property prices could plunge even further—but whether that will be enough to revive transactions remains to be seen.
