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Property market in Myanmar expected to stay flat till 2020

Myanmar’s property market has been lacklustre since 2015 and this situation is expected to continue until next year, said U Myo Myint, general secretary of the Myanmar Construction Entrepreneur Association during an industry discussion in Yangon last week.

“This is the current situation. However, what is good is that there will be no worsening in the conditions or a downturn. We cannot say precisely whether the market will climb in 2020 as a lot depends on the policies of the government,” he said.

The cost of construction is now high due to the strength of the US dollar, so property prices are not expected to fall from their current levels as the dollar price goes up, U Myo Myint added.

Property transactions have decline by 50 percent from their peak five years ago due to low demand. As foreigners are still unable to own land in Myanmar, there has been no pick up in the industry from foreign buying, said Daw Yin Yin Myat, central committee member of the Myanmar Urban and Infrastructure Development Association.

Affordable options

The need for low-cost and affordable housing, if addressed, could serve as a stimulus for the overall market, Daw Yin Yin Myat added. “The drop in demand has dragged the market down with it. This can be attributed to the fact that many people who need housing simply can’t afford it,” she said.

On the other hand, the market did receive a small boost over the last year due to the introduction of long-term home loans by private and government banks. While still out of reach for many, the loans are a great help to the middle class although not in sufficient numbers to move the market.

Developers marketing apartments priced between K20 million and K120 million have seen some interest in their offerings thanks to the introduction of the loans, said U Kaung Thu Win, founder of property website Shweproperty.com.

“Based on the property fairs held both by our Shweproperty.com and other developers 2018, this category of housing sold so well that there were almost no apartments left to sell,” he said.

Myanmar citizens between the ages 25 and 45 were the most eager to buy homes because their incomes have been rising and were the largest category of buyers, said U Kaung Thu Win, adding that transactions in more affordably-priced housing have been more active than luxury housing units.

In comparison, most buyers of high-value property already have houses so they are staying on the sidelines when it comes to buying new homes for investment purposes, say estate agents.

Lower rates

Meanwhile, despite long-term home loans, many buyers still face difficulty with interest rates. In that light, the property market may change if lending rates are lowered, said U Myo Myint.

“It is acceptable that taxes are collected on the initial payment for a home but taxing again on purchases with a bank loan is like hindering people from buying homes. Such tax rates should also be relaxed,” said U Myo Myint.

If the government provides support in terms of policy, the construction sector and the country’s economy will develop and the property market will follow, he said.

As the interest rates for long-term mortgage and taxes cost up to double the value of a house, many are reluctant to take on loans, except those who desperately need a home, said builders during the event.

For lower-income people in Myanmar to own a home, the government needs to reduce or exempt the citizens from stamp duties and other property taxes, said Myanmar Real Estate Services Association General Secretary Daw Moh Moh Aung.

Taxes should be reduced for first-time buyers, second-home buyers should be taxed according to the current rates while third-home buyers should be taxed more, she said.

SOURCE: MYANMAR TIMES

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