Property market gloomy in 2013, gloomier in 2014

While some institutions believe that the Vietnamese real estate market would recover soon after it bottomed out, others think that it is too early to talk about the market recovery.

 Pessimism prevails in the market

The New York Times has recently published an article showing a very promising outlook of the Vietnamese real estate market in the near future.

It wrote that the Vietnamese real estate market has begun recovering as the macroeconomic indexes are getting better and the government is taking drastic measures to carry out the banking sector reform.

According to New York Times, some foreign investors bought real estate in Vietnam, the sign that shows the increase in investors’ confidence and the improved liquidity.

The Vietnamese real estate market is now also backed by the bank loan interest rate reductions. And once it signs the Trans Pacific Partnership Agreement (TPP), the national economy would grow more strongly, thus making the real estate market warm up.

Meanwhile, the Vietnamese experts prove to be more pessimistic about the real estate market, affirming that the real estate market would be even gloomier, while the prices would go down further in 2014.

The latest report of the Hanoi Construction Department about the apartment price index showed that the prices decreased further in the third quarter of 2013 after the sharp decreases in the second quarter.

The price of medium-class apartments in Ba Dinh district is now just equal to 81 percent of that in the first quarter of 2011 (lower by 5 percent than the second quarter of 2013). The figure in Thanh Xuan district is 75 percent (lower by 3 percent than the second quarter of 2013). In Ha Dong and Tu Liem districts, the prices have dropped to 66 percent and 69 percent of the prices in the first quarter of 2011.

The report of Ban Viet Securities Company said the housing market is bottoming out, while the selling prices continue decreasing because of the weak demand and the lower attractiveness in the eyes of investors.

However, the report pointed out that the first optimistic signs have been shown. The number of transferred projects has been increasing, thus allowing to set up the floor prices. The inventory index in the third quarter of 2013 was lower by 21 percent than the first quarter. The government has been trying every possible method to speed up the disbursement of the VND30 trillion package which aims to rescue the property market. Meanwhile, Vietnam is considering loosening the requirements on the foreigners to buy houses in Vietnam.

According to Nguyen Ngoc Thanh, Director of the Hai Phong-based Construction Development and Investment Company, most of the reports released recently showed that the selling real estate prices tend to come closer to the cost prices, while commercial houses’ prices come closer to the houses for the poor. This means that the prices of commercial houses have bottomed out.

Prices would drop further

Dr. Nguyen Truong Tien, a member of the Vietnam Construction Federation, former General Director of the Hanoi Construction Corporation, noted that though the real estate prices have decreased sharply, they remain relatively high.

Tien believes that if advanced technologies are applied, and if the market runs in a transparency, the house prices may go down by another 50 percent, hovering around VND7 million per square meter.

Meanwhile, Vu Dinh Anh from the Market and Price Research Institute said there is not enough information to say if the market is recovering from the bottom, is bottoming out or is going down further. The transaction prices of some projects cannot represent the market.

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