Despite of lowering taxes, the sluggish domestic real estate market reportedly does not meet expectations of recovery.
Myanmar Real Estate Services Association (Yangon) Chairman Htay Myint said that they expected the domestic real estate market would have recovered for about 70% after lowering taxes but only about 35% had met that expectation.
“Because it was late as the timing is close to general elections and then the investors have a wait and see attitude. So it does not have the impact on the market as expected,” he said.
However, Htay Myint added that the domestic real estate market which was previously almost dead has slightly responded to the move of lowering taxes.
“The market started to move in some places though it does not move on a larger scale in the entire country. Some sellers raised their price quotations and some buyers showed interest for giving offers,” Htay Myint added.
Currently deals were made in Yangon Region for single houses built on single plot worth about one billion kyats and also land prices are slightly higher in Dalla and Dgaon Lay Townships where there are development projects.
The old sale tax for immovable fixed assets of land and building is 15% up to 30 million kyats, 20% for land and buildings worth between 30-100 million kyats and 15% for more than 100 million kyats. These rates were reduced in the 2019 Union Tax and Revenue Law starting from October this year to 3% for lands and buildings worth up to 100 million kyats, 5% for these assets worth between 100-300 million kyats, 10% for between 300 million and one billion kyats, 15% for between one billion and three billion kyats and 30% for above three billion kyats respectively.
These new real estate tax rates came into effect for the new financial year starting from October 1, 2019 and ending September 30, 2020.
Myanmar Construction Business Association General Secretary Myo Myint said that 70% of the domestic real estate market fell by 40% in prices and moreover region government’s urban development plans of new town planning projects and the sale of government land to individuals would have much more impact on this domestic real estate market.
But he suggested that lowering real estate taxes would not result in a dramatic rise in real estate prices and there would be more deals struck in the long term at more reasonable prices.