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Price hikes in the domestic property market in recent months indicate a pattern of unhealthy growth, the Minister of Construction, Nguyen Hong Quan, said last Friday in an online dialogue on the Government’s website.

Quan said the country’s fledgling property market had been bustling in recent years, making significant contribution to the country’s development.

But he noted that such activity had adversely affected middle-income and poor people.

Quan said the price of apartments, offices for rent and hotel room rates had risen dramatically by the end of 2007 and continued to rise earlier this year.

In early February this year, the price of an apartment in HCM City and Hanoi increased on average by 50% over the same period of 2006.

In March and April this year, the market showed signs of cooling down after the Government took measures to control investment in the sector, according to Quan.

The minister, however, said that speculation still prevailed in the property market as supply failed to meet increasing demand.

Real estate transactions were still not transparent at trading centres, he said.

"Many people who want to buy a house cannot get access to official information about the housing project in terms of quantity, quality and price."

To address the problem, Quan said, all discussion and transactions must be made through transaction centres.

The property market must be transparent with supervision by relevant authorities, the community and the entire society, he said. Violators of the laws in this sector must be punished.

Asked why Vietnam was on the list of the top 17 countries with the highest property prices while its per capita income was in the lowest group, Quan said the situation was unreasonable.

"The State is seeking to stabilise the property market and try to meet the demand for housing for the major portion of the population, low-income people. The price must be adjusted accordingly, while the State should also improve the people’s income at the same time."

Quan admitted that the Government’s low-income housing programme had been carried out slowly.

He said: "Over the past 16 years we did not pay much attention to creating a new social housing fund for low-income people to rent or purchase a house."

The social housing fund, set up following the Law on Housing, is supported by Government incentives in land rent and tax so that tenants can enjoy lower rent.
Quan said the Government’s policies on property development were not meant to increase the price of land and property, but rather were created to promote the circulation of goods on the market to help the country’s socio-economic development.

The minister said the State encouraged all economic sectors including foreign investors to participate in property market development.

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