Real estate developers claim they are slashing prices, but in reality the cuts do little to ease the burn of the overheated market on buyers’ wallets.
Man came back to Ho Chi Minh City last month, hoping to settle down after living in the US for 20 years.
Confident with about US$600,000 to spend, he was attracted by property in Saigon South’s District 7, just three kilometers away from downtown.
“240-square-meter land lot for building a villa,” the ad said. “Good price.”
The good price turned out to be an uncompromising VND96 million ($6,000) per square meter, too steep for Man.
The lot’s owner said the price had been VND100 million last month.
Still hoping for some property in the prime area, Man downgraded his search from a villa to a smaller house only to face a price tag of VND6.5 billion ($409,578) for 100 square meters.
“Even if I could afford the land, I wouldn’t have enough money to build a house,” Man said.
“Why’d they tell me property prices are down?” he asked, referring to local media reports of a cooling real estate market.
Though land and housing prices did go down this year after banks tightened loans to curb inflation and the government disclosed a plan to levy heavy taxes on excessive or unused properties, the subsequent price cuts have not been significant and land prices are still through the roof.
As fears that a recession on the real estate market is near are not unfounded, many have jumped to sell and few have jumped to buy.
Property firms’ price reductions, usually between VND1 million–5 million ($63-315) per square meter, actually do little to cut the overheated prices.
Tran Van Binh, a salesman of Pho Moi real estate company, said some landowners in Binh Chanh District had cut prices by VND4 million ($252) per square meter within a week.
“Many who have to pay the banks soon are selling land at lower prices,” Binh told Thanh Nien.
And big investors are still buying.
“They think that the reduction is just short-term and prices will go up again,” Binh said.
Their confidence is not baseless as the country’s business hub is in dire need of housing for its booming population of 8 million.
Even those who sell are not losers, Binh said.
Prices have already reached so high a level that sellers’ discounts barely threaten profits at all.
“People love to hear ‘price down’ so we please them by cutting a few million [dong],” a speculator who owns four pieces of land in District 9 told Thanh Nien.
His land was inflated four times what he had paid, to VND20 million ($1,260) per square meter last year.
Now he is selling the property for VND16.5 million ($1,039) per square meter.
“A bit less profit, but we’ll never lose,” he said.
But small buyers like Man are left in the lurch.
Man turned his hunt to Binh Thanh District in his search for a house but was no luckier.
A 124 square-meter villa in the riverside Saigon Pearl residential area would cost him an intimidating VND25 billion ($1.6 million).
He gave up looking after a fruitless month.
(Thanhniennews)
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