Economic experts say that real estate prices in Vietnam are still too high compared to the actual income and real estate businesses themselves are responsible for the freezing of the current market. Real estate businesses continue to believe that the tolerance of enterprises has reached its limit. More than ever, the State must take measures to "warm up" the real estate market.
Experts disagree
In the discussion about the prospects for recovery of the Vietnam real estate market Vietnam recently held, the majority of economists agreed that the VND30,000 billion package to support the real estate market will not meet the expectations of market recovery. Instead, real estate businesses themselves need to demonstrate market demand and make plans to lower prices to stimulate demand of the market.
According to Mr Nguyen Van Trung, Vice Minister of Planning and Investment, although real estate businesses have encountered difficulties when the market is frozen, the market price of real estate has not decreased. Therefore, there is no reason to bring back real estate prices to the peak in 2008. According to Mr Trung, there still exist some unusual problems in the real estate market, especially price fixing elements.
Dr Vo Dai Luoc, former Director of the Institute of World Economics and Politics shared that it is crucial to evaluate the current real estate bubble if wanting to save the real estate market. The property price is 26.6 times as high as average income of Vietnam, while that ratio in other countries in the area is only from 4-6 times. "If the State don’t have accurate assessment but just throw money to settle things, things will definitely fall back to where they are," said Mr Luoc.
Dr Vo Dai Luoc also said that corruption in the real estate sector is very large. The VND30 trillion package is unlikely to be handed to the poor and those who are in need of housing. The release of VND30 trillion support package for the poor is like using the poor to break the ice of the real estate market.
Mr Mai Xuan Hung, Deputy Chairman of the Economic Committee of the National Assembly said that it seems, to this point, the real estate market has yet to find a way out and businesses are looking forward to a rescue from the State, but no one has ever confirmed that the market has hit the bottom.
Dr Nguyen Tri Hieu said that VND30 trillion credit package to support the real estate market in Vietnam is not reasonable. Even though the interest rate is only 6 percent, the time of lending is too short. He gave an example that in the US, this rate is only three percent and the time of lending lasts over 30 years. Therefore, this credit package has not created the trust for the people. Thus, the ability to recover the market in this year is very unlikely.
Mr Phan Truong Son, Chairman of the Management Board of HUD3 said that although in recent time, the market has seen sharp reduction, but according to calculations, property prices could still fall by 30 percent. According to Mr Son, customers are burdened by a lot of unreasonable costs in the price of real estate products and a variety of other costs. According to his analysis, these costs can be reduced immediately if authorities have drastical measures such as the reduction of construction management cost by 10 percent.
Agreeing with that view, Dr Dang Hung Vo, former Deputy Minister of Natural Resources and Environment said that the property market is still facing many paradoxes, for example supply is excessive while thousands of people remain homeless. That real estate prices are too high compared to the actual income of the people has led to this paradox. If the market is rescued now, the gap will become increasingly large and it will be too hard to fix. Mr Vo concluded that it is essential to have measures to lower the cost of real estate products because bringing the cost to the peak period of 2008 is impossible.
"In 2009, the government also gave a hand to save the stock market, but it did not work out. After the rescue, the stock market continued to fall further. And now the stock market is going with its true nature. The same happens to the real estate market, do not expect much because no one can save the market for there will be same things as we have seen when saving the stock market," said Mr Vo.
Enterprises continue to face difficulties
Although his business is operating in real estate sector, Mr Phan Truong Son said that the price of real estate products can still be reduced further. This shows that real estate businesses have yet to show determination to rescue the market and responsibility for the market has been pushed to the State by the majority of real estate enterprises.
At the seminar, the majority of real estate enterprises still looked forward to the support from the State to overcome the current difficult period. An enterprise even asked why the VND30 trillion support package only focuses on supporting the poor to buy social houses while there is no supportive policy to stimulate demand for commercial houses.
In this difficult period, instead of being more responsible for reducing the paradox of supply and demand of the real estate market, the majority of businesses still only cares about their own money. According to many economists, selfishness of real estate investors is the main obstacle hindering the recovery of the market.
The financial capacity of the people is limited, while the State can not always try to save the real estate market, although in recent years there has also been a lot of effort to support the market. Therefore, although real estate investors continue to claim their difficulties, the State as well as people can not keep loading the interest burden for real estate investors.
Luong Tuan
Vietnamese
