Low Interest Rates & Resurgence Of The Housing Market 
Posted 3,May

By Chaveendra Dunuwille

In Local News

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According to the latest data released by the Central Bank of Sri Lanka with the  experience of current reduced interest rates Sri Lanka’s housing market is  making a resurgence and as a result housing prices have begun to soar. 

The Housing Market in Sri Lanka is generally considered as one of the most  active however with the change in government policy it fell into a lull that lasted  until 2019. This was largely due to the increased interest rates and investment  killing taxes introduced by the then government in the pretence of paying off  debts owed by the nation to its creditors mainly China. Along with a lack of  clarity in the policy the confidence in the economy began to disappear. 

Following the 2019 Presidential election the realtors who anxiously awaited the  change in policy were dealt with another blow with the spread of the global Co vid 19 pandemic. However the negative impact of the pandemic was quickly  dissipated with a monetary policy that allowed for developers and people to  return to the sector sooner than expected. 

Sri Lanka is currently operating at the lowest interest rates in its history with a  salaried individual being able to obtain a housing loan at an interest of only 7%.  The more sector friendly policies introduced by the current government has  resulted in a 20% growth in the sector since the 2nd quarter of 2020. This is also  considered as one of the highest gains the sector has experienced in a  considerable time period. Furthermore with the easing of lockdown restrictions  the sector experienced a 3.4% growth in the 4th quarter compared to the 1.2%  growth recorded the previous year.  

The increase in the housing prices is a considered a ‘stark contrast’ compared to  the decrease in land and apartment prices experienced during the pandemic  period according to the research conducted by the rating agency ICRA Lanka  Limited. It is expected that as long as the sector friendly policies remain the  sector will continue to grow even further.