Real estate troubles raise serious debate
16-05-2013
http://www.vir.com.vn/news/en/property/real-estate-troubles-raise-serious-debate.html
Thousands of unsold high-end housing units are both a symptom and cause of economic malaise
The “Revitalizing Vietnam’s Property Market” roundtable participants analysed both opportunities and challenges of the current market and the development trending in the coming time.
Nguyen Van Trung, Deputy Minister of Planning and Investment, said the government was pro-active in issuing Resolution 02 to rescue the market, but its implementation was still slow.
One of the hottest topics debated in the roundtable was whether or not the government should rescue the real estate market.
Dr.Nguyen Anh Tuan, editor-in-chief of VIR, said that although there existed diverse arguments concerning the property market should be rescued or not, it was undeniable that the property market is an indispensable part of Vietnam’s socialist-oriented market economy, one of decisive factors to economic growth and development sustainability.
“World experiences show that property sector crisis often causes uncertainties, even triggers economic slump,” said Tuan.
According to Nguyen Tri Hieu, member of the management board of the Ocean Bank, the real estate market must be rescued and not allowed to fall freely.
“Even the government had issued the solution to help real estate market survive, every sector of the society must be aware of their own obligations. The market can be rescued only if all resources are combined into one,” Hieu said.
Two things which must be done first, Hieu said, was to solve the bad debt and reduce the stockpile of unused properties.
Hieu said that the proposed interest rate of 6 per cent for three years was not attractive enough. “This should be reduced to around five per cent in between 15 and 20 years, only this can open wider access for end-users,” he proposed.
Meanwhile, professor Nguyen Mai, former Deputy Chairman of the State Committee for Cooperation and Investment (SCCI), now the Ministry of Planning and Investment, said that economically, long delays of several dozen thousand apartments and thousands of villas construction projects could cause a huge waste of natural resources as massive amounts of capital sit idle.
Meanwhile, social housing is one of humanity’s essential needs and a housing policy is one of state’s crucial policies.
Therefore, Mai said, that the Vietnamese government, businesses and consumers must join efforts to settle property market’s current woes through applying a broad range of measures to avoid repeat of a similar situation in the future and specific measures to quickly get rid of current critical state.
Vo Dai Luoc, former director of the Institute of World Economics and Politics, said that the intervention from the government into the real estate market is indispensable.
Luoc said the first radical measure is to eliminate the non-market features of Vietnam’s property market and set up a mechanism to ensure the market development follows market rules.
“Further steps should involve stabilising macro economy and controlling inflation to avoid dong devaluation, which would drive people to pour money into property market to protect their asset values,” he said.
He also advocated “opening effective trading channels to attract investment capital; not rescuing the property market using cash, but let it be self-regulated, and open the property market to foreign players. Foreigners should be allowed to buy houses in Vietnam.”
“The property market is a fundamental market in any commodity-based economy, so it must evolve pursuant to market principles, with state intervention when necessary. It is now most important for the state to soon formulate international standard institutional frameworks for the property market’s smooth operation,” he added.
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A $1.4bn question On the sidelines of the roundtable named “Revitalizing Vietnam’s Property Market”, VIR’s Nguyen Chung collected opinions from different experts and developers regarding the government’s $1.4-billion plan to rescue the paralyzed property market. Phan Huu Thang, chairman of the Vietnam Tourism Property Association The Resolution 02/NQ-CP issued in January 7, 2013 by the government provides a number of comprehensive solutions not only to thaw the frozen domestic real estate market but also help to spur economic growth. The property market is now impacted by verbose policies, insufficient management, high cost price and undecided customers’ psychology. Dang Hung Vo, former deputy minister of Ministry of Natural Resources and Environment Many say Resolution 02 is for rescuing the property market and property investors. It is wrong to say so. We should see that this is the State’s necessary interference into the market, in which a great part of the policy is focused on helping labourers have houses. The resolution is centred not only on supporting enterprises, but also helping solve difficulties for the whole economy. The most important thing now is what solution can be taken to solve NPLs in stagnant property projects? The resolution has mentioned this but no clear solution has been implemented. Thus, state management agencies from the central to grass-roots levels have focused on carrying out only half of the tasks prescribed in Resolution 02. It is needed for the remaining tasks in the resolution to be implemented soon. Phan Truong Son, chairman of HUD 3 At present, the gap between the supply and the demand is very large. I think that the main reason is because of insufficient the state’s policies. If the VND30 trillion ($1.43 billion) support package is put operation, it will not have remarkable impact on the housing market. The current support package concerns mostly to interest rate which occupy a small influence position. The housing price can not go down further. That means almost all real estate developers either only take back enough initial investment capital or sell at a loss. I do not agree that the current housing price is high. A housing product’s costs will have to take into account a lot of fees such as compensation, site clearance, building materials, design and interest rate.n To well implement Resolution 02, state management agencies at all levels need show respect to the principle of transparency and equity. All self-interest-based activities will continue harming the current weak property market. Let’s think that the market is in a difficult delivery, but a new property market will see the light. Resolution 02 is likened to a good delivery, with the midwife being state management agencies and officials. If the midwife performs her task well, the new property market will be able to grow strongly in the future. Nguyen Viet Manh, head of State Bank’s Credit Department “Property is one of important economic sectors of a nation. The property market doldrums in some recent years in Vietnam have not only undermined the sector efficiency but also cast detrimental impacts on the performance of other sector. In the banking sector, albeit property-oriented loans only account for 8-10 per cent of total outstanding loans of the economy, mortgaged assets in property have been tremendous (around $57.7 billion). Therefore, property market hardships cast big impacts on banking sector’s credit quality. |
