Staggering housing inventory draws ministry into inspections
20-09-2012
 For illustration purpose only Photo: Tuoi Tre |
The inspection aims at classifying and gathering data on both ongoing and suspended realty projects, the national broadcaster Vietnam Television (VTV) quoted Deputy Minister of Construction Nguyen Tran Nam as saying.
The outcome will help the ministry gain a clear picture on what projects should get funding to continue and what should be changed in purpose and scale to fit with local realty growing maps, he added.
Recent statistics show that the amount of unsold apartments in Hanoi and Ho Chi Minh City has reached some 60,000 units.
According to figures from a realty consultant, Hanoi is now holding about 40,000 apartments in stock, while the number is 20,000 apartments in HCMC.
Vu Dinh Anh, an economic expert, said that if it is estimated that VND1 billion equals one apartment, the total amount of idle money buried in the real estate industry is up to VND60 trillion, equal to $2.86 billion.
According to Anh, the real estate market is selling the apartments at unaffordable rates simply so they are purchased.
“Although the demand for living apartments is rising sharply thanks to an increase of over 1 million people in population annually, condominium projects still see sluggish sales.”
“It will take a normal person with the average monthly income of VND5 million some 20 years to be able to buy an apartment,” Anh said.
Nguyen Manh Ha, head of the Housing and Real estate Market Department under the ministry, said that the Hanoi realty market is facing large inventories, especially in outlying districts.
The prices of most of segments, from high quality to popular units, are decreasing, of which apartments priced over VND25 million per square meter have seen the fastest fall.
“The price decrease is mostly occurring in isolated projects, while the market has a shortage of fully equipped apartments. Local customers do not want to buy them since those projects have not had their social infrastructure, such as schools and commercial centers, finished,” he added.
Recently, the ministry has asked all departments of construction to report on the situation in order to submit the information to the National Assembly in the fourth general meeting.
Deputy Minister Nguyen Tran Nam argued that price fluctuations and profits in business operations have prompted enterprises in other sectors like electricity, petroleum, insurance and banking to heavily invest in the real estate market over the past few years.
Currently, the total outstanding loans for real estate have dropped to VND180 trillion, down from a record of VND280 trillion in the past.
On a slide
Since the start of this year, the real estate market has continued to face difficulties, and real estate prices are decreasing in all segments.
For example, after cutting VND7 million per square meter from 2011’s prices, a Linh Dam-based condominium has reduced prices by a further VND2 million per square meter to stimulate demand.
In addition, a series of secondary investors in the Phap Van, Minh Khai and the European Vietnamese village projects have had to give up and suffer a loss of hundreds of millions of dong.
In order to support customers, the Vietnam Bank for Industry and Trade (Vietinbank) has provided a credit package of VND5 trillion for individual customers to buy houses.
Many experts have opined that even stronger solutions to help real estate flourish again are needed.
The Housing and Real Estate Market Department agency has proposed an exemption from value added tax (VAT) to decrease selling prices.
“I propose to exempt 10 percent of the VAT for house buyers in order to reduce the selling price,” said Ha.
Phan Thanh Mai, general secretary of the Vietnam Real Estate Association, said we need to pilot demand support funds as well as put housing savings funds into reality.
“We also need an unchanged interest rate policy for buyers during the loan life. In addition, we can mobilize long term capital from bonds or stocks,” Mai said.
Though he believes the real estate market will face many difficulties in the near future, Deputy Minister Nam said adjusting credit policies and interest rates of the government will help to improve the situation and create conditions for development in the next few years.
“The real estate market will gradually warm up, along with the economic recovery,” said Nam.
