Real estate starts to recover

The domestic real estate market has become warmer as property prices have dropped sharply to suit the budget of the average buyer.
The domestic real estate market has become warmer as property prices have dropped sharply to suit the budget of the average buyer.

Vu Van Phan, Deputy Head of the Ministry of Construction's Housing and Real Estate Market Management Department, announced at an online meeting on Reality and the Prospects of Vietnam's Property Market, held in Hanoi on May 28, that estate prices had declined 20-30 percent or even 50 percent compared with the "hot" period in the market several years ago.

The price decrease in suburban and Ring Road 3 areas was higher than property projects in the city's central districts.

"The market has also seen an increasing number of estate transactions," Phan noted.

Statistics collected from the Municipal Department of Construction, property businesses and floors revealed that the city has had more than 6,350 successful transactions in the year 2013. In the first quarter of last year, the number of transactions was 800, and those in the second, third and fourth quarters were 1,050, 1,800 and 3,000, respectively.

As of May 15, disbursement of the 30 trillion VND (1.43 billion USD) package, which aimed at providing credit for social housing projects, was 1.2 trillion VND (57.14 million USD) to 18 projects and 4,825 households.

The latest figure from the Construction Ministry revealed that the disbursement of the package has seen positive changes due to drastic measures taken to accelerate progress.

Specifically, the total committed loans were 3.7 trillion VND (176.19 million USD) to 4,832 households. The ministry has also committed to providing credit to 22 projects, with total capital of 1.92 trillion VND (91.43 million USD).

Answering the question of whether the market could bounce back to its "hot" period in 2009, Phan stated that such a situation will not arise as the market has faced difficulties for a long time together with high inventory.

"These difficulties have brought valuable experience to investors in finding a suitable segment. In addition, speculators have also learnt lessons about the market."

Tran Ngoc Quang, Deputy General Secretary of the Vietnam Real Estate Association, agreed, adding that the market has seen positive changes.

Of the total, the market segment for medium-sized apartments has the highest number of transactions. In addition, property firms have regained customers' trust.

However, Quang pointed out that property distribution and service companies have been developed with a lack of consistency and professionalism, especially in management.

"The market is still suffering a lack of sustainability, which requires consistent efforts from all relevant parties though it has seen improvement," he noted.

Tran Nhu Trung, Deputy General Director of Tan Hoang Minh Group, added that the market has experienced a period of adjustment after a hasty and unprepared period.

"The domestic estate market has shown improvements this year as its liquidity rose by 2-3 percent in each quarter," Trung noted.

The change was remarkable though it was small as the market has been naturally adjusted and has not been affected by reactions to trends or events.

He added that the recovery has not been observed in all segments, as figures from property floors and consulting firms revealed that 50 – 80 percent of transactions were on projects that had good locations and were under construction or completed. Those projects that did not fall under any of these factors have no liquidity.-VNA

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