» » Homebuyers eschew paying in gold as precious metal price surges

The common practice of using gold to buy houses in Vietnam has dwindled as prices of the precious metal climb relentlessly.

The Nguyen Dinh Chieu branch of the ACB Real Estate Exchange has reported that the number of housing and land deals made in gold decreased 15 percent in the second half of May compared to the first half.

Gold prices closed May at VND21.25 million a tael, or US$995 per ounce, up 20 percent from VND17.74 million on May 1.

Of 29 successful transactions at the real estate exchange in the second half of the month, only seven, or 24 percent, were made in gold. The others were made in dong.

Representatives from the exchange said housing deals in gold accounted for more than 35 percent of all deals before the metal reached the VND21- million mark.

But price fluctuations have made potential buyers hesitant to pick up houses valued at 500 taels of gold or more, said the exchange.

Most of the transactions in gold in the second half of May were worth less than 100 taels, or VND2 billion, the exchange said. The biggest deal was worth 250 taels, or more than VND5 billion.

A buyer, who wished to be unnamed, said he agreed to buy a house on District 1’s Nguyen Cu Trinh Street for 105 taels of gold last month.

He said a tael of gold was worth VND19.6 million at the time he negotiated with the house owner, but then shot up to more than VND21 million early this month.

“If I didn’t like the house so much and were not ready for a surge in gold prices, I wouldn’t have bought it,” he said.

Pham Van Hai, general director of ACB Real Estate Company, said Ho Chi Minh City residents had been trading properties in gold for years.

But he said just as many people now bought houses in dong as they did in gold.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate

Association, said gold price increases may hurt the real estate market, which has yet to rebound.

But as for land allotted for residential projects across the city, their prices, posted in dong, have gone up thanks to stronger demand.

At the Phu My residential area in District 7, land prices in May jumped by VND1 million month-on-month to VND35 million per square meter, according to property firm Vinaland.

The company said the land prices for projects benefiting from the opening of Nguyen Van Cu Bridge in late April or the opening of Phu My Bridge, which is expected to take place in September, had jumped in May.

The former bridge links districts 1 and 5 with districts 4 and 8 while the latter, the city’s largest cable-stayed bridge, will connect District 2 and District 7.

Source: NLD

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