Property experts call for new approach
Property experts call for new approach
Government officials and experts met yesterday to discuss ways to revitalise the property market through several measures, including resolving bad debts, adjusting land prices, and balancing supply and demand.
Speaking at the seminar, Chris Brown, general manager of Cushman and Wakefield Viet Nam, a leading commercial real estate consultant, said the number of non-performing loans was higher than the reported 6 per cent, and the real estate made up 70 per cent of the figure.
Citing John Sheehan, author of the book Optimising Distressed Loans, Brown said that markets would not recover until non-performing loans were recycled at a price low enough to create widespread confidence.
"Sentiment is a key to recovery," he said.
The seminar, themed "Revitalising Viet Nam's Property Market", was organised by the Viet Nam Investment Review newspaper and Cushman & Wakefield Co.
Brown noted that one of the biggest barriers to entry, and the single biggest factor in ensuring profitable property development, was the price of land.
Viet Nam's major cities have maintained higher prices than Singapore, he added.
He said that Thailand recovered its real estate market by offering credit packages to home buyers at a low interest rate and a long payment term. Thailand also issued bonds to buy the bad debts held by commercial banks.
Dang Hung Vo, former deputy minister of Natural Resources and Environment, said since 2010 the property market had seen a surplus of supply, resulting in a big inventory of high-priced and medium-priced houses.
As a result, supply and demand became imbalanced.
He said this was an inevitable result of an investment boom that was not adequately and effectively controlled, even though it had contributed to economic growth.
The property market boom also fueled inflation.
Last year, amid a large number of property inventories as well as non-performing loans at commercial banks, investors reduced prices to a very low level, he said.
But their products failed to sell, Vo said.
Meanwhile, although there was a high demand for cheaper houses, the supply was insufficient.
Nguyen Viet Manh, head of the State Bank of Viet Nam's credit department, said the current inventory in the property market was still high.
In addition, as long as there is a huge unsold volume in the top-end housing and office-for-lease market, the supply for low-end and social housing will remain modest.
Manh said there was a need to restructure the property market to match people's actual demands.
In recent months, many commercial housing developers in Ha Noi and HCM City have asked for permission to convert projects to social housing.
They have also been able to access the government's new credit package designed to help builders and investors save costs and lower prices.
Many said this was a good sign that the market was responding to people's housing demands.
However, the property market would remain stagnant for the rest of the year, and would not likely rebound in the near term.
On May 18, the Government passed Decree 53 that regulates the establishment, organisation and operation of a national asset management company (VAMC) for Vietnamese credit institutions.
The State Bank of Viet Nam (SBV) is ramping up efforts to be able to put VAMC into operation on July 9.
The asset management company is expected to help the economy tackle bad debt and revitalise the moribund property market.
This could help thaw the amount of unsettled bad debt and bring vitality to the market, he said.
Taxes also need to be adjusted, according to Nguyen Mai, former deputy chairman of the State Commission for Cooperation and Development (now the Ministry of Planning and Investment).
He said the reduction of corporate income tax and value-added tax rates were necessary to help businesses, including property firms.
The Government and ministries should also introduce guiding documents to bring these regulations into effect as expected from July 1, he added.
Housing policy, including the Housing Law and the Law on Property Business, also plays an important role in the recovery of the property market.
Mai said that in May the Ministry of Construction noted the Housing Law was eight years old and the Law on Property Business, seven years old.
The two laws had failed to inspire market players to take part in housing, especially social housing development, he said.
Housing prices in general are too high relative to most people's incomes, he added.
The deputy chairman of the Viet Nam Federation of Civil Engineering Associations, Pham Sy Liem, said it was now time to give birth to new laws that are closer to the reality of today's market.
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