Developments of Vietnam real estate market in the last months of the year, the time which is usually seen as the most vibrant make the real estate businesses more pessimistic than ever before. In many areas, that the price has fallen considerably, even up 50 percent, still fails to make the market get lively. On the sideline of workshop on international experience and amendment to the Land Law, Mr Dao Trung Chinh–Vice Chairman of Land Management Administration, the Ministry of Natural Resources and Environment talked with the press on this problem. Si Son reports.
Despite the fact that the real estate market is on the downtrend, demand stimulus is not successful yet. This is completely different from the situation in the first half of 2010 when housing price kept increasing day by day but people were still rushing for the purchase. Do you think this is a paradox?
That is right. Housing price has fallen considerably but it is still high compared to the people’s income. This leads to a paradox in which project owners complains about “backlog” while the people with actual demand cannot afford the price. Investors nearly disappeared as they do not find any conducive opportunity in real estate at this time.
In your opinion, what is the main reason leading to the current situation?
On the objective aspect, I think the general economic recession has had a large impact on the people’s purchasing power. In my subjective opinion, the long-festering problem of the real estate market is rampant planning, improper assessment of demand leading to the unrealistic supply.
Besides, real estate price is still too high compared to the people’s income and the segment for low-income people and civil servants are not paid due attention. Recently, it has been rumored that the price is on the decline, even down 50 percent, but this still remain unaffordable for the people with actual demand. In fact, the considerable price reduction is only available for properties of great value while the housing price for low-income people drops negligibly.
To address these shortcomings, in your opinion, what should be done first and foremost?
For the part of state managing agencies, it is important to address these shortcomings properly as the fact that project owners meet with difficulties in liquidity, financial capacity is partly attributed to inappropriate policies.
Therefore, it is high time to address the housing needs for people. This may be tackled by removing difficulties for enterprises so that they can sell products soon or even resort to long-tem measures like hire purchase or installment purchase…
If based on the people’s income, how much do you think Vietnam real estate price would reduce is reasonable?
Only when the people’s income is properly managed, can we know how many percent the real estate price reduces is suitable. In fact, it is very hard to control the people’s income as there are many sources. I think, the market is supposed to control itself to provide reasonable lowering rate based on the people’s affordability. For the time being, it is not the right time for the people to buy houses except for the ones having the actual demand as real estate price is likely to further decline.
The Vietnam Association of Financial Investors (VAFI) has put forward a proposal that recommend allocating an amount of VND 8,000 billion to support the interest rate of 3-5 percent for enterprises. How do you access the feasibility of this plan?
I think this solution is also important. However, all the proposals need to be carefully considered as it may be suitable but only work at a certain time. The urgent measure that needs taking immediately is to help enterprises sell their products. Lowering interest rate is also regarded as a measure but it cost time to exert the affect on the market. Great real estate backlog require as soon as possible the proper measures that can help project owner out of this situation. These measures include delayed payment, hire purchase, extension of land use payment period, simplified administrative procedures…
Currently, in one investigation, we have discovered many violated project owners who have wrong doings in planning and construction. According to the provisions of the law, these cases are very unlikely to get certificates. Furthermore, we do not have any regulations on mini apartments. Therefore, I think there should be an inclusive measure to solve this problem.
What do you think about the current performance of real estate enterprises?
I think for the time being, real estate enterprises are yet going well since the purchasing power of the buyer is not high. There remains the psychology of waiting and evaluating the situation. The purchase for the purpose of resale rather than residential use is prevalent. However, in the current context, these investors are not willing to take the risk. Instead, they keeps collecting information and analyzing the situation.
If real estate enterprises need a solution, what do you think it should be?
In my opinion, we need to focus on tax reduction, land use payment deferment, simplified administrative procedures…in order to create the most favorable conditions for project owners.
Thank you very much!
Vietnamese
