Government action needed to thaw property market: expert

Mar 13th at 23:04

13-03-2013 23:04:42+07:00

The huge stockpile of unsold condominiums in Vietnam can’t be resolved without strong government intervention, said a foreign expert.

John Sheehan, an acknowledged international expert on distressed bank loan books and non-performing loans, visited to Hanoi last week at the invitation of property consultant CB Richard Ellis Vietnam.

“Real estate sector can not solve this dilemma by themselves then they need the help from the government,” Sheehan said of the near-paralysed housing market, burdened by more than 40,000 unsold units.

Sheehan cited the examples of Thailand and the Philippines, where property crisis occurred and government had to give its hand to rescue the market.

Thailand’s property crisis in 1997 led to intervention from International Monetary Fund. In the Philippines’ crisis in 2002, the government had to raise funds from the public to solve the problem.

“The sooner intervention occurs, the better result gains,” Sheehan said. The proper role of the government in rescuing the real estate sector is still a subject of debate among different authorities in Vietnam. In a recent meeting held by the Economic Committee of the National Assembly in Hanoi, many deputies expressed a variety of concerns about the dilemma.

According to Minister of Construction, Trinh Dinh Dung, the problem was reflected in the surplus of unsold new housing - estimated at more than 40,000 units nationwide - and the collapse of home prices by 50 per cent from their peak, down to a level roughly equal to that of 2006.
To increase the liquidity of the large volume of unsold units, Dung said, a high priority must be given to strategies to revive the real estate market.

To achieve a breakthrough, Dung said, the ministry would review all projects and make determinations about which would be halted, and even revoked if necessary. The ministry will also consider the restructuring of on-going projects to balance demand and supply, and ask for helps from bank to reduce interest rates.

Do Van Duong, a member of Standing Committee of Justice under the National Assembly, said that how to rescue the sector must be clear.

“We also have to clarify whether the government will rescue developers or the home buyers,” Duong said.

The rescue, Duong said, must not be at the expense of the overall economy, which was already was weak and exhausted enough.

Earlier this year, the government approved a list of incentives to ease the difficulties facing the real-estate sector, including slashing taxes for both home investors and buyers.

According to the Ministry of Construction, under the initial survey from 50 cities and provinces, up to January 2013, more than 42,250 apartments and houses, 92,800 square metres of office for lease, 98,400sqm of trading centre are unsold.

Those unsold property products are valued at some VND40.75 trillion ($2 billion)