Nepal Rastra Bank (NRB) governor Dr Yubaraj Khatiwada has suggested housing developers to opt for price correction to stimulate the market.
"The developers need to focus on building smaller and medium homes which are affordable instead of trying to make money from speculation on land prices,” pointed out the governor, during an interaction programme organised by NRB’s Former Employees’ Association on the topic 'Involvement of Financial Sector in Real Estate Transaction'.
He pointed out that the central bank will come strongly against the tendency of some developers who accumulate land for speculative trading shooting up the land prices abnormally.
Governor Khatiwada also mentioned that the deadline for reducing their exposure to realty loans to 25 per cent of the total loan portfolio is already over but financial institutions have not been able to do so.
"The central bank will consider the safety of depositors’ deposits, and financial stability before deciding on promoting certain industries,” he said referring to measures needed to be taken for reviving the housing market in Nepal.
He also emphasised that developers should not cut down forests or flatten hills in the name of housing development. “More focus should be given on developing amenities such as roads, drinking water facility, and drainage to provide better living conditions for homeowners,” he said.
Former chairman of Janata Bank Nepal Guru Prasad Neupane pointed out the need for low cost apartments and a national policy to provide housing units to low and middle income people. "To deal with bad assets of the financial institutions, an asset management company has to be established, so that financial stability is not affected” he said.