|Vietnamnet - The government’s efforts to force real estate prices down have shown effects: prices are expected to keep decreasing by 30-40% until August.|
Prices down, speculators incurring losses
Before Tet, Minh, a securities investor on ACBS trading floor, got VND10bil from stock sales and he used the sum of money to buy two land plots at Him Lam-Kenh Te projects, two blocks of apartments in district 7, near Phu My Hung urban area.
One week after that, the prices skyrocketed by 10%, which would have brought fat profit to him if he had re-sold the land plots and apartments. However, Minh did not sell them, hoping to earn fatter profit when the price went up further.
Minh seemed to make the wrong move with his properties. As the prices have been falling down for one month, he has incurred the loss of VND2bil.
Mai Van Chung, a real estate broker in district 9, HCM City, said that speculators and brokers are now suffering. Chung related that he earned 2% of commission for every successful deal. However, sometimes he decided to spend money to buy land and houses in the hope of getting fatter profit than commission. And now he has an apartment left unsold, which he bought for VND2.5bil.
An officer of the Mai Huynh Real Estate Company said that he knew a client who bought apartments of Thai Son 1 project distributed by Mai Huynh at VND25mil/sq m, and re-sold them for VND18mil/sq m.
High-grade apartments under projects in districts 2, 6, 7, Phu My Hung ad Nha Be have been witnessing their prices plunge most sharply. Meanwhile, the prices of land plots under the projects of An Phu-An Khanh, Him Lam-Kenh Te have also dropped from VND55-60,000/sq m to VND40-45mil, down by 25% over the highest peak.
The real estate business circle says that prices will keep going down until August with the expected decrease of 30-40% on average.
However, houses and apartments for medium-income earners, which did not see the ‘price fever’ when the market was hot, now have stable prices.
Apartments in projects in the suburbs of HCM City for medium-income earners, including Le Thanh project in Binh Tan district, Thoi An in district 12 are still selling at VND350-500mil/apartment.
Good news: real estate prices return to real values
Construction and real estate firms all highly applaud the government’s efforts to force real estate prices down, though they said the price decreases have been making a lot of speculators suffer from heavy losses.
Nguyen Phung Thieu, Director of Sai Gon Gia Dinh Real Estate Company, said that as all people injected money in real estate over the last time, real estate had an attack of fever. If the market cannot be cooled down, the real estate bubble will burst, which will be a big danger for the national economy.
Thieu said that the profit of 15-20% would be reasonable for real estate business, like other kinds of business, while overly high prices will threaten the national economy.
Dr Tran Du Lich, Head of the HCM City Economics Institute, said that the price decreases should be seen as active signs, showing that the government’s measures can settle the core problems of the real estate market. The measures have helped bring properties back to their real values without shocking the market.
Lich said that a lot of people may incur losses due to the measures, including speculators, and this will help prevent speculation activities in the future.
Vietnam Real Estate
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