Real estate troubles raise serious debate

Thousands of unsold high-end housing units are both a symptom and cause of economic malaise

The “Revitalizing Vietnam’s Property Market” roundtable participants analysed both opportunities and challenges of the current market and the development trending in the coming time.

Nguyen Van Trung, Deputy Minister of Planning and Investment, said the government was pro-active in  issuing Resolution 02 to rescue the market, but its implementation was still slow.

One of the hottest topics debated in the roundtable was whether or not the government should rescue the real estate market.

Dr.Nguyen Anh Tuan, editor-in-chief of VIR, said that although there existed diverse arguments concerning the property market should be rescued or not, it was undeniable that the property market is an indispensable part of Vietnam’s socialist-oriented market economy, one of decisive factors to economic growth and development sustainability.

“World experiences show that property sector crisis often causes uncertainties, even triggers economic slump,” said Tuan.

According to Nguyen Tri Hieu, member of the management board of the Ocean Bank, the real estate market must be rescued and not allowed to fall freely.

“Even the government had issued the solution to help real estate market survive, every sector of the society must be aware of their own obligations. The market can be rescued only if all resources are combined into one,” Hieu said.

Two things which must be done first, Hieu said, was to solve the bad debt and reduce the stockpile of unused properties.

Hieu said that the proposed interest rate of 6 per cent for three years was not attractive enough. “This should be reduced to around five per cent in between 15 and 20 years, only this can open wider access for end-users,” he proposed.

Meanwhile, professor Nguyen Mai, former Deputy Chairman of the State Committee for Cooperation and Investment (SCCI), now the Ministry of Planning and Investment, said  that economically, long delays of several dozen thousand apartments and thousands of villas construction projects could cause a huge waste of natural resources as massive amounts of capital sit idle.

Meanwhile, social housing is one of humanity’s essential  needs and a housing policy is one of state’s crucial policies.

Therefore, Mai said, that the Vietnamese government, businesses and consumers must join efforts to settle property market’s current woes through applying a broad range of measures to avoid repeat of a similar situation in the future and specific measures to quickly get rid of current critical state.

Vo Dai Luoc, former director of the Institute of World Economics and Politics, said that the intervention from the government into the real estate market is indispensable.

Luoc said the first radical measure is to eliminate the non-market features of Vietnam’s property market and set up a mechanism to ensure the market development follows market rules.

“Further steps should involve stabilising macro economy and controlling inflation to avoid dong devaluation, which would drive people to pour money into property market to protect their asset values,” he said.

He also advocated  “opening effective trading channels to attract investment capital; not rescuing the property market using cash, but let it be self-regulated, and open the property market to foreign players. Foreigners should be allowed to buy houses in Vietnam.”

“The property market is a fundamental market in any commodity-based economy, so it must evolve pursuant to market principles, with state intervention when necessary. It is now most important for the state to soon formulate international standard institutional frameworks for the property market’s smooth operation,” he added.