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Vnre.blogspot.com - Vietnam’s apartment market has been oddly quiet for several months. Insiders say that in HCM City, speculators have gone to the sidelines.

A number of real estate developers are about to launch medium and low-cost apartment developments into the market. Though demand seems to be weak, the developers think their flats are exactly what people who have real demand for accommodations need.

Apartments selling slowly despite price cuts

Big real estate dealers in HCM City such as Sacomreal and Vinaland describe the apartment market as stable over the last six months, with no big price fluctuations.

In the second quarter of 2010, at least ten apartment projects went on the market in the southern metropolis. Most of the apartments bear price tags of between 12 and 15 million dong per square metre, a levels that fits the pockets of medium income earners.

In Thu Duc District alone, apartments are on offer at a number of projects: My An, Truong Tho, Sun View, Riverside 4S, Hiep Binh Chanh residential quarter and New Tower. However, though many wish to buy low and medium cost apartments, the purchasing power remains very low, according to the real estate dealers.

Further upscale, developers of a lot of medium and high class apartment developments recently have had to offer special inducements to clients, including price reductions of up to two million dong per square meter, or eight percent, at the My Duc project in Binh Thanh district. Some developers are giving buyers longer to settle their contracts.

Real estate brokers say that the developer of Everich II project has decided to cut his asking price to $1300 per square metre from $1600. The builder emphasizes that there has been no reduction in the quality of the development; instead he has reduced his profit margin to attract more buyers

Where are the speculators?

Various reasons are cited to explain the quiet housing market. Vinaland’s chairman, Tran Minh Hoang, says that in current circumstances, having to pay personal income tax is a concern for many who have been trading in flats. Moreover, they lack ready sources of capital.

Therefore, “in the real estate market now, the buyers are mainly those who really plan to live in the homes they buy. The speculators are on the sidelines. That takes a lot of liquidity and energy out of the market.”

The unsalability of apartments can also be explained by the fact that many potential customers have lost confidence in real estate developers. There have been too many lawsuits in the last year. A common complaint is that developers collect advance payments from buyers but fail to implement projects. Because “one rotten apple spoils the barrel,” insiders say, apartments have been selling very slowly.

Le Hoang Chau, Chairman of the HCM City Real Estate Association, pins the blame on high lending interest rates. Currently, banks are insisting on getting 18 to 20 percent per annum from people seeking home loans, while charging businessmen only 12.5 to 13 percent per annum.

Source: SGTT

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