HA NOI (VNS)— The Viet Nam real estate market was expected to recover and re-gain consumer confidence despite having been characterised by instability over the past few years, experts said at a seminar for property firms on solutions and opportunities on approaching capital from credit organisations.
Tran Kim Chung, Policy Research's head from the Central Institute of Economic Management, said the local real estate market would likely improve by this year end due to the effects of State credit policies for the property market, but there would not be any significant boom in the next few months.
The banking sector and property sector were on their way to restructuring to overcome current difficulties in production and business, Chung said. So the value of the banking loans for property projects would still be limited and dependent on the quality of projects and investors in those projects.
The local property market showed signs of warming up but the recovery of the market was still slow and depended on the recovery of the domestic market, Deputy Minister of Construction Nguyen Tran Nam said at the seminar held on Wednesday in Ha Noi by the Xay dung (Construction) newspaper.
The real estate investment fund would go into operation on September 15 and was expected to create new capital as the most important potential source for the market, Nam said.
However, the State policies had not yet seen many effects in the property market because not many enterprises got loans with a low interest rate at around 12 per cent, Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company Ltd said.
Many firms must accept losses in order to go through their apartment inventory, he said.
Nguyen Manh Ha, director of the Construction Ministry's Housing and Real Estate Market Management Department, said the State should exempt 10 per cent of value-added tax for housing buyers to reduce selling prices and inventory.
Phan Thanh Mai, general secretary of the Viet Nam Real Estate Association, said the State should create policies that stabilise interest rates of loans for buyers for the long term to encourage people to buy into the property market.
Over the past years, the domestic real estate market saw unstable development, price fever and high profit in trading property products which created a misleading impression of the demand and liquidity of the market, Deputy Minister Nam said.
So enterprises invested in the property market, even firms that did not have experience in the property sector and finance ability, Nam said. Loans for property projects increased quickly and focused on the segment of luxury apartments and houses.
The construction licences were not based on real demand or development of infrastructure in the regions that had property projects, he said.
Many property trading firms saw difficulties in production and business, especially small – and medium-sized enterprises with limited financial capacity and must accept loans from banks and their customers to implement their projects, he said.
The trouble in the property market affected banks' liquidity as well as the production and business of sectors connected with the real estate sector, including building material production and decoration.
Therefore, the market now had a total inventory of 60,000 units of apartments worth VND60 trillion (US$2.85 billion) in Ha Noi and HCM City, the country's two largest cities, according to the General Statistics Office.
Banks had credit tightening policies to reduce risk from the property sector. These policies made the situation of the real estate firms more difficult.
Property prices were reduced many times in the two major cities, but the market nevertheless did not attract customers because of the absence of confidence. They said the quality of property products had not matched the selling price for many years, Nam said. — VNS