Real estate sales slow, prices still high

Despite measures to tighten lending for property speculation, real estate prices in Ho Chi Minh City are expected rise, although at a slower pace.

A day at A.K.T.V Real Estate Agency in Ho Chi Minh City goes by quietly with only a handful of customers dropping in to list their land for sale.

Other property trading centers in the city have been experiencing a similar decline in transaction volume over the past week, which some say is caused by commercial banks’ decision to tighten credit on property loans.

Banks last week tried to limit their exposure to Vietnam’s risky land market, tightening the guidelines for property loan applications in a bid to minimize lending to speculators.

Yet prices remain high with a square meter of residential land in districts 2 and 9 costing up to VND40 million (US$2,500).

Nguyen Cong Huy, an A.K.T.V’s customer, said he went to the agency to find buyers for two lots he bought last August in Truong Thinh Company’s residential project in District 9.

“I heard banks would reduce lending to real estate investors so I fear land prices will go down as a consequence,” he said.

Huy said he was offering his land at VND16.5 million ($1,030) per square meter.

Like Huy, other “intermediate” investors are also trying to offload their land.

Land in Gia Hoa, Nam Long and Dong Duong companies’ residential projects in District 9 are being re-sold at around VND500,000 to 1 million ($31 to $62) per square meter higher than the original sale price.

The general price level, ranging from VND13 million to 18 million ($813 to $1,125) per square meter, however, still seems too high to attract buyers.

Over the past week, three real estate agencies on Tran Nao Street in District 2 have not found any customers for the 16 lots in Gia Hoa Company’s project entrusted to them.

In the South Saigon New Urban Area, prices also remain at their all time high despite a low transaction volume.

Many intermediate investors are now reselling residential lots at between VND24 million and 98 million ($1,500 to $6,125) per square meter.

Still on the rise

Pham Van Thuong from the Bureau of Housing Management’s real estate market management office says the property market will be quieter this year than last but will still continue in an upward trend.

Banks’ tighter credit may make it more difficult for property investors to apply for loans to finance their projects.

The law permits investors, especially housing investors, to use funds from prospective customers to help finance the project.

Thuong said this could provide an alternative to bank loans.

As for the new government measures to speed up housing projects in a bid to narrow the gap betweendemand and supply, Thuong said results will take time.

“It will take at least two years before we see any significant increase in housing supply,” he said.

In addition, Thuong said, despite minor fluctuations in recent years, the domestic property market has been rising steadily.

“It has soared and descended,” Thuong said.

“But it has never plummeted.”

To keep prices rising in a healthy manner, the government needed to explore bold measures to increase supply, Dinh Duc Sinh from the Real Estate Business Association said.

Sinh suggested allowing intermediate investors to buy apartments as soon as a project’s foundation was completed.

First-time investors, on the other hand, were cautioned against entering the market in its present hard-to-predict phase.

Real estate sales slow, prices still high

Despite measures to tighten lending for property speculation, real estate prices in Ho Chi Minh City are expected rise, although at a slower pace.

A day at A.K.T.V Real Estate Agency in Ho Chi Minh City goes by quietly with only a handful of customers dropping in to list their land for sale.

Other property trading centers in the city have been experiencing a similar decline in transaction volume over the past week, which some say is caused by commercial banks’ decision to tighten credit on property loans.

Banks last week tried to limit their exposure to Vietnam’s risky land market, tightening the guidelines for property loan applications in a bid to minimize lending to speculators.

Yet prices remain high with a square meter of residential land in districts 2 and 9 costing up to VND40 million (US$2,500).

Nguyen Cong Huy, an A.K.T.V’s customer, said he went to the agency to find buyers for two lots he bought last August in Truong Thinh Company’s residential project in District 9.

“I heard banks would reduce lending to real estate investors so I fear land prices will go down as a consequence,” he said.

Huy said he was offering his land at VND16.5 million ($1,030) per square meter.

Like Huy, other “intermediate” investors are also trying to offload their land.

Land in Gia Hoa, Nam Long and Dong Duong companies’ residential projects in District 9 are being re-sold at around VND500,000 to 1 million ($31 to $62) per square meter higher than the original sale price.

The general price level, ranging from VND13 million to 18 million ($813 to $1,125) per square meter, however, still seems too high to attract buyers.

Over the past week, three real estate agencies on Tran Nao Street in District 2 have not found any customers for the 16 lots in Gia Hoa Company’s project entrusted to them.

In the South Saigon New Urban Area, prices also remain at their all time high despite a low transaction volume.

Many intermediate investors are now reselling residential lots at between VND24 million and 98 million ($1,500 to $6,125) per square meter.

Still on the rise

Pham Van Thuong from the Bureau of Housing Management’s real estate market management office says the property market will be quieter this year than last but will still continue in an upward trend.

Banks’ tighter credit may make it more difficult for property investors to apply for loans to finance their projects.

The law permits investors, especially housing investors, to use funds from prospective customers to help finance the project.

Thuong said this could provide an alternative to bank loans.

As for the new government measures to speed up housing projects in a bid to narrow the gap betweendemand and supply, Thuong said results will take time.

“It will take at least two years before we see any significant increase in housing supply,” he said.

In addition, Thuong said, despite minor fluctuations in recent years, the domestic property market has been rising steadily.

“It has soared and descended,” Thuong said.

“But it has never plummeted.”

To keep prices rising in a healthy manner, the government needed to explore bold measures to increase supply, Dinh Duc Sinh from the Real Estate Business Association said.

Sinh suggested allowing intermediate investors to buy apartments as soon as a project’s foundation was completed.

First-time investors, on the other hand, were cautioned against entering the market in its present hard-to-predict phase.

Those who were already in the market, Sinh said, should complete their existing projects rather than begin new ones.

HCMC Real Estate Association Deputy Chairman Le Hoang Chau said the association had also submitted to the municipal People’s Committee a series of suggestions on how to cure property “fever.”

Reported by Tuyet Nhung - Tran Thanh Binh

Those who were already in the market, Sinh said, should complete their existing projects rather than begin new ones.

HCMC Real Estate Association Deputy Chairman Le Hoang Chau said the association had also submitted to the municipal People’s Committee a series of suggestions on how to cure property “fever.”

(thanhniennews)