The Government organised a meeting along with the HCM City Real Estate Association (HoREA) last Saturday to discuss difficulties faced by property investors and find ways to overcome them.
HoREA chairman Le Hoang Chau said the property market was in deep depression with apartment and land prices down 30-50 per cent since the end of last year.
Talking about the reasons, a HoREA representative said with the Government tightening loans to the property sector and increasing bank interest rates and corporate income tax, the sector was finding it hard to mobilise funds.
A property company representative said despite having to pay 20-23 per cent interest, it was not easy to obtain bank loans.
Many projects have been delayed due to lack of funds. Property prices have slumped and building material prices risen suddenly. Property transactions have slowed down, the lending rate has gone up, and deadlines for old loans are closing in. All these factors have sent small investors into a panic.
The red tape involved in setting up a project has deterred new investors from entering the market.
The slowdown in the property market has also affected the banks. In the past, they offered customers loans of 70 to even 90 per cent of the cost of an apartment for periods of at least 10 years.
But with the property market going into a slump, borrowers are unable to repay their debts, leaving banks to sell their collateral to recover the loans. The general director of a HCM City-based bank said, however, it would take some time to do this, leaving banks struggling for liquidity.
Chau said the property market had returned to realistic values, offering investors the chance to buy apartments and land at reasonable prices.
To overcome the current slump, HCM City real estate companies suggested several measures.
They suggested that banks should provide property companies medium- and long-term loans at reasonable interest rates.
They should also offer easy loans for terms of up to 25 years to low-income people to buy houses, they said.
The Government should reduce the corporate income tax to 20-22 per cent from 25 per cent, tax on transfer of land use rights to 2 per cent from 4 per cent, and registration fee to 0.5 per cent from 1 per cent, they said.
They also wanted the Government to fight speculation and draft policies for social housing programmes for workers and other low-income people.
Dr Nguyen Xuan Trinh, deputy head of the Central Institute for Economic Management, called on the Government to reform procedures related to approval of property projects and issuance of building licences, and house ownership certificates.