HCMC – Gov’t to take action to spur property market
06-01-2013
At a meeting with the HCMC government on Tuesday, Prime Minister Nguyen Tan Dung stated bad debt, inventory and real estate were adversely affecting the economy. In the coming time, solutions will be worked out to cope with bad debt, thus helping the real estate market out of the doldrums.
Later this month, the Government will discuss specific solutions and a separate resolution for the property market, said Dung.
He informed bad debt had reached some VND400 trillion, including VND200 trillion to be restructured by banks. Of the remaining VND200 trillion, real estate debt accounts for 70%.
According to the Ministry of Construction, there are about 15,000 unsold apartments in HCMC, with a total value of VND30 trillion. In fact, the inventory value must be much higher as many project owners have mobilized funds and finished site clearance, but have yet to carry out their projects due to poor demand.
Another reason is that supply has far exceeded demand. Under its housing development strategy, HCMC needs some 66 million square meters from now to 2020, while new urban projects occupy a combined area of 80 million square meters, according to a report of the construction ministry.
Furthermore, property developers mainly focus on high-end large-size housing products. Of the 35,000 apartments completed prior to 2011, 37% are in the high-end segment, 38% in the mid-end segment and 25% in the low-end segment.
The high-grade apartment market has saturated, while affordable products for the majority of homebuyers are insufficient.
HCMC vice chairman Nguyen Huu Tin said the city had set up four working groups to survey property projects.
Many projects have been found suspended or moving at a slow pace. Some others are struggling with high inventories, leading bad debt to surge.
In comparison with late 2011, property prices and trading volume have dropped sharply.
