Untie Real Estate Market

VNRE - Circular 16 guiding the compliance of Decree 71 just already issued can be regarded as an action of untying the real estate market which has been depressed for months. However, despite its taking effect for nearly one month, positive signs brought about to the market are not clear, successful real estate transactions are still so few.

Warming up the maket

Decree 71 is thought to have dealt a blow to investors surfing the market in the past time, its effects on real estate market are not small but really necessary for the market to be in the orbit.

According to Mr Nguyen Do Viet – Vice General Director of Song Da Thang Long Company, Circular 16 guiding the compliance of Decree 71 will positively influence real estate in long term. Especially, Circular will ease secondary investors’ shocks caused by Decree 71. Thereby, the number of transactions will increase, bringing market out of frozen status at the end of the month. Said Mr Viet, if Circular 16 hadn’t been issued timely, real estate market in the last months would have continued to freeze, which would have bad impacts on the market in following years.

Actually, before Cicular 16, real estate had to face many difficulties. One of the first challenges was lack of capital when banks at the same time tighten credit for real estate. Besides, Decree 71 was issued as “death certificate” for surfing investors. Matter of many people’s concern was buyers have no ownership of legal documents with marks. Before Circular 16, buyers wishing to transact have to be with publicly notarized authorization, however, this authorization contract will be invalid if one of the parties die or be without civil behavioral ability. Regarding those risks, many people dare not spend money to carry out transactions.

Appearance of Circular 16 has partially meet the demand of most investors, they seemed to be untied when being publicly notarized authorization contract of sharing capital to purchase houses in future. Accordingly, buyers will directly undersign their names in the contract. Representatives from notarization office A1 said, since Circular 16 was issued, the number of people coming for public notarization increase significantly compared with before. Therefore, Circular 16 has created opportunities for real estate market to develop, people with real demand of buying but without certification will be real notarized and accepted by investors, afterwards will be provided land ownership certificate.

Investors still being cautious

Positive signs from Circular 16 were clearly seen in dome projects in the West of Hanoi, Van Khe, Van Phu and ones along extended Le Van Luong, which were only transactions with right to change names in capital contribution contract. This type of contract has been transacted since Circular 16 took effect.

Although the market is partially untied in comparison with Decree 71, results it brought about to the real estate market now stop at modest level. Said representative from Real Estate of VNPT Land, volume of transactions does not significantly increase. Number of people ask for purchased increased but with aim of surveying the market. Successful transactions, if there are, are only projects at reasonable, medium prices, with transportation convenience and investors keeping timely etc. On the other hand, unpractical projects such as being far from center, with transportation inconvenience, at unreasonable prices are not transacted.

One of reasons given by enterprises in real estate fields is regulations partially tighten enterprises when transferring contracts. Circular 16 indicates, ones without function of real estate trading (individual, household) can transfer contracts easily. However, units with function of real estate trading, prior to transfer, have to ensure registration of business license, with legal capital and make real estate transactions on the stock. Such tight control also restrains the activeness in transactions of real estate market.

However, another solution for real estate at the moment is regulation on development and transaction of mini apartment building. IN fact, this model has developed dynamically in Hanoi for the past few years. When it is admitted – it will probably accepted by the market etc.

Reported by Luong Tuan/ VCCI