With the determination to unfreeze real estate market in 2013, the Government of Vietnam has introduced a variety of measures to stimulate demand. However, the real estate market seems to be insistently hibernating with no sign of breakthrough in the coming quarter.
6 years for recovery
According to Mr Jonhn Sheehan, a member of the Royal Institution of Chartered Surveyors (FRICS) rooted in Britain, Vietnam is at its first phase in the process of recovering the real estate. Thus, it will take 2 years of difficulties and 4 years to handle bad debts before the real estate market can be gradually recovered.
Oversupply, plus unreasonable selling prices are sinking real estate enterprises into crisis. It is supposed by most of them the opportunity for market recovery in 2013 is quite low. Vice Director Nguyen Van Duc, Dat Lanh Property Company, said that 2013 will still be a hard year for real estate sector. The progress of settlement will depend on how the Government undertakes stimulating aids to the market.
The Government’s efforts to ease difficulties for businesses and stimulate the economic demands still cannot help the market to recover and many real estate businesses are facing with bankruptcy dissolution, causing adverse impacts to the whole economy.
According to many experts, it is very difficult to give out scenarios for real estate market in 2013. To save the market at the moment, important actions to take is to handle inventory, handle bad debts and stabilize the market.
Not easy to unfreeze the market
When real estate market is no longer the land to earn maximum profits from investments, sees no “waves”, the market itself has eliminated a number of premature investors. The market is doing screening to aim at sustainability. Given its deep impacts on economic development, regarding market obstacles, the Government has saved 70 percent of proposals to handle bad debts for real estate, introduce measures to extend loan credits to buy houses such as encouraging financial organizations to associate with investors to give out long term credit aid to borrowers to buy houses, enable division of apartments, conversion into social houses, dorms etc. Notably, State Bank of Vietnam has recently planned to reduce interest rates on loans for buying social houses to 6 percent per year with term of 15 years. If this policy is enforced in Quarter I, it will be good news for real estate market in 2013.
However, given the Governmental new policies to rescue the market in current context, it is impossible for the market to recover in short term, evaluated experts.
It should be noted that economic conditions in 2013 are forecasted to have many challenges in the context of increasing bad debt, decreasing total demand, risk of escalating inflation if there is no tight control. Therefore, even when a variety of Governmental policies and restructure of banking system are enforced in Quarter I, until the end of the year can real estate weak up.
On the other hand, the market is retaining too large inventory with surplus demand in most segments. Even many real estate businesses who were hasty to release inventory converted commercial houses to social ones. However, the paradox here is in spite of high demand, there are still nearly 10,000 social houses unsold in Hanoi. It’s not the people have no demand but it doesn’t suit theirs, explained Mr Nguyen Van Duc.
Thus, it is said that trendy investment without careful calculation will easily cause social houses to suffer inventory like commercial ones at present. Certainly, the problem of real estate inventory will have no end.
Luong Tuan
Vietnamese
