Over the past few years, Sri Lanka has experienced a house pricing boom with prices surging to over 17% during 2018 and continues to do so even today. Here’s a look at the reasons for this fluctuation and the possibilities that lie ahead for the Sri Lankan housing market.
House Prices vs Rental Yields
In recent times, rent prices in the country have drastically increased. Despite this, rent yields are reaching record lows as the increased prices cannot match the increase in house prices. Still, while gross rental yields won’t be attractive in the long term, they are better in high-end and luxury rental properties.
The mortgage market of Sri Lanka is quite small – directly the result of very high-interest rates and loan offers. Private banks tend to offer adjustable mortgage loans while you can only opt for fixed-rate loans with state-owned banks.
Perhaps the biggest reason behind the house price surge is the lack of new construction works. High costs of operation and fragmentation within the industry are the main causes of this problem.
Now, just because house prices are soaring, it’s not all negative news. The fact is, Sri Lanka’s property market is still in its infancy and is expected to keep growing in the coming years. In many ways, property developers in Sri Lanka – say, for instance, John Keells Properties – are spearheading large real developments in the country, signaling future growth.
Over the past few years, Sri Lanka has experienced a house pricing boom – this is due to several factors. Here’s a deeper look into the subject.