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Property market to remain stagnant for some time: experts
The local real estate market may need a longer time to recover although there are claims that the process has already begun, experts say.
When the property market is in a slump, some brokers often try to attract customers by claiming the market has warmed up, the manager of a real estate company warned.
Analysts say that in fact, the number of buyers is still small even though land prices in some districts have dropped as much as 60 percent compared to the beginning of this year. Prices of apartments in District 7’s Phu My Hung have also gone down by about 30 percent.
With overseas remittances falling and investors tightening their spending amid the global economic slowdown, it is unlikely that the housing market, especially its luxury segment, can overcome the slowdown soon, they add.
Economist Dinh The Hien says the real estate market in Ho Chi Minh City is now deep into recession, estimating the number of transactions has dropped by 80-90 percent compared to the same period last year.
Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association, said the city property market can only recover at the end of next year.
Tran My Phat of Phat Loi Brokerage Company said it was now a great success for a brokerage company if it could sell about 10 houses in District 4 or District 7 in two weeks.
ACB Real Estate, an arm of Asia Commercial Bank, reported an increase in successful transactions recently but it also said less than 10 houses were sold every week.
Pham Van Hai, general director of the company, said land plots and expensive apartments are now harder to sell than medium-priced single houses.
Hai also said some people started selling houses recently but it does not necessarily mean the market has warmed up.
In some cases, sellers only wanted to avoid paying higher taxes next year, he said.
With the introduction of a new personal income tax law on January 1, owners of more than one house will have to pay a two percent tax on each house they sell.
Moreover, as the city land valuations for 2009 have been increased by at least 10 percent from last year, residents will have to pay higher land use taxes.
Tran Van Thu in Binh Thanh District, for example, says he wanted to sell a 200 square meter house this month because it would save him about VND40 million (US$2,340) in taxes.
2009 prospects
The prospects for HCMC’s real estate market remain good despite the global economic slump, the US-based Urban Land Institute and business services firm PricewaterhouseCoopers said in a recent report.
The southern metro ranks second after Bangalore and before Mumbai, both in India, in terms of development prospects, according to the Emerging Trends in Real Estate Asia Pacific 2009 report.
Speaking at a meeting held in Hanoi on Saturday, Nguyen Manh Ha, head of the Construction Ministry’s Housing and Real Estate Market Management Bureau, said the Vietnamese property market would face many difficulties in the first months next year.
“Hopefully, the Ministry of Construction’s proposal to use the real estate sector to pull the economy ahead will warm up the market,” Ha said, noting the demand is still high.
Last week the ministry proposed the government spend part of a planned stimulus package to build 10,000 flats for low-income residents by 2015. The construction could cost about VND2.5 trillion ($151.5 million).
Nguyen Tran Nam, Deputy Minister of Construction, said so far property developers have only focused on the luxury segment and housing prices are out of reach for most buyers.
The government would develop all market segments equally and create policies to provide housing for medium- and low-incomers, Nam said.
In a move that is expected to improve transparency in the sector next year, both developers and agents are setting up real estate exchanges in accordance with the regulations issued by the ministry. The Saigon Real Estate Corporation, Nam Long Real Estate Company and Sacomreal are among the companies involved.
According to the Ministry of Construction, the establishment of real estate exchanges in Vietnam is necessary to “purify” the local market.
Ha said developers and brokerage companies will need to provide enough information about a product for customers and they will have to take responsibility for any wrongdoing.
vna
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